The Partnership continued the suspension of the cash distribution for its common units for the current quarter. No distributions have been declared for common or subordinated units for the quarter ended
For the remainder of 2019, we continue to see coal prices remain steady and we have contracted significantly all of our 2019 coal production at prices exceeding 2018 levels. We have taken steps to lower our costs and increase productivity at our operations, which have included the hiring of new senior operational management at our Central Appalachia and Northern Appalachia operations. We believe these steps and renewed focus on cost controls will lead to improved financial results for the remainder of 2019.
In Central Appalachia, our Remining 3 surface mine encountered previous, unmapped mining works that resulted in fewer met tons produced than expected, which lowered met ton sales and adversely impacted our financial results. In Northern Appalachia, we fully transitioned the
Rhino remains committed to safety and providing a safe working environment for its employees. We commend all of our employees who promote our safety-first culture as part of our core principles.
We believe our focus on the cost control measures we have undertaken and the expected continued strong coal markets will provide stronger financial results for the remainder of 2019.”
Coal Operations Update
- Sales volume was 389,000 tons in the quarter versus 458,000 tons in the prior year and 462,000 tons in the prior quarter. The decrease in sales volume compared to the prior periods was the result of adverse geological conditions encountered that resulted in fewer tons being produced for sale. Tons of coal sold also decreased as customers delayed shipments to future periods during the first quarter of 2019.
- Coal revenues were
$30.1 million, versus $30.9 millionin the prior year and $36.6 millionin the prior quarter. The decrease in revenue from the prior periods was primarily due to the decrease in in tons sold as discussed above. Coal revenues per ton in the quarter were $77.29versus $67.43in the prior year and $79.07in the prior quarter. The increase from the prior year was primarily due to the higher contracted sale prices for the met and steam coal sold from this region. Metallurgical coal revenue per ton in the quarter was $111.98versus $90.58in the prior year and $93.63in the prior quarter. Steam coal revenue in the quarter was $55.75per ton versus $47.43in the prior year and $62.54in the prior quarter.
- Cost of operations per ton in the quarter was
$68.37versus $58.67in the prior year and $65.03in the prior quarter. The cost of operations per ton increased as we sold fewer tons as discussed above and the Partnership experienced an increase in labor, contract services and roof support during the three months ended March 31, 2019.
- Sales volume was 329,000 tons, versus 300,000 tons in the prior year and 321,000 tons in the prior quarter.
- Coal revenues were
$13.0 million, versus $11.6 millionin the prior year and $12.7 millionin the prior quarter. Coal revenues per ton were $39.49compared to $38.67in the prior year and $39.54in the prior quarter. The increase in total coal revenues and coal revenues per ton was primarily due to higher contracted sale prices for tons sold from the Pennyrile mine.
- Cost of operations per ton was
$44.17versus $40.01in the prior year and $33.98in the prior quarter. The increase in cost of operations per ton was primarily the result of increased production and sales as well as increases in labor costs, maintenance costs and an increase in roof support costs as steel prices continue to increase.
- Sales volume was 238,000 tons versus 224,000 tons in the prior year and 264,000 tons in the prior quarter. The increase in coal sales from the prior year was due to an increase in demand for coal from the
- Coal revenues were
$8.7 millionversus $8.1 millionin the prior year and $9.2 millionin the prior quarter. Coal revenues per ton in the quarter were $36.61versus $35.95in the prior year and $34.87in the prior quarter. Total coal revenues and coal revenues per ton increased year-over-year due to higher contracted prices for coal sold from this region.
- Cost of operations per ton was
$30.35versus $26.87in the prior year and $29.08in the prior quarter. The cost of operations per ton increased during the current quarter compared to the prior periods as we experienced higher operating costs during the first quarter of 2019 at the Castle Valleyoperation.
- Sales volume was 121,000 tons versus 90,000 tons in the prior year and 120,000 in the prior quarter as the Partnership saw an increase in demand for coal from this region compared to the prior year.
- Coal revenues were
$6.1 millionversus $3.7 millionin the prior year and $5.4 millionin the prior quarter. The increase in the current period was attributable to the increase in sales and to higher contracted sales prices for the tons sold from the Hopedaleoperation. For the first quarter of 2019, coal revenues per ton were $50.19compared to $41.14in the prior year and $45.29in the prior quarter. The increase was primarily due to higher contracted prices for tons sold from the Hopedalecomplex compared to the prior periods in 2018.
- Cost of operations per ton was
$56.60compared to $57.21in the prior year and $54.00in the prior quarter. The increase in cost of operations per ton compared to the prior quarter resulted from increases in labor costs, contract services and roof support at the Hopedalemining operation.
- Maintenance capital expenditures for the first quarter were approximately
- Expansion capital expenditures for the first quarter were approximately
The table below displays Rhino’s committed coal sales for the periods indicated.
|Q2-Q4 2019||Year 2020||Year 2021|
|Avg Price||Tons||Avg Price||Tons||Avg Price||Tons|
|Northern Appalachia/Illinois Basin||$||41.32||1,583,417||$||40.02||1,320,000||$||41.91||800,000|
Evaluating Financial Results
Rhino management uses a variety of non-GAAP financial measurements to analyze the Partnership’s performance, including (1) Adjusted EBITDA, (2) coal revenues per ton and (3) cost of operations per ton.
Adjusted EBITDA. Adjusted EBITDA represents net income before deducting interest expense, income taxes and depreciation, depletion and amortization, while also excluding certain non-cash and/or non-recurring items including provision for doubtful accounts. Adjusted EBITDA is used by management primarily as a measure of the operating performance of the Partnership’s segments. Adjusted EBITDA should not be considered an alternative to net income, income from operations, cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Because not all companies calculate Adjusted EBITDA identically, the Partnership’s calculation may not be comparable to similarly titled measures of other companies. (Refer to “Reconciliations of Adjusted EBITDA” included later in this release for reconciliations of Adjusted EBITDA to the most directly comparable GAAP financial measures).
Coal Revenues Per Ton. Coal revenues per ton sold represents coal revenues divided by tons of coal sold. Coal revenues per ton is a key indicator of Rhino’s effectiveness in obtaining favorable prices for the Partnership’s product.
Cost of Operations
Overview of Financial Results
Results for the three months ended
- Adjusted EBITDA of
$0.6 millionand net loss of $7.3 millioncompared to Adjusted EBITDA of $4.5 millionand net loss of $2.8 millionin the first quarter of 2018. Adjusted EBITDA decreased period-over-period primarily due to the decrease in net income resulting from an increase in costs at several locations for labor, contract services and roof support.
- Basic and diluted net loss per common unit of
$0.53compared to basic and diluted net loss per common unit of $0.22for the first quarter of 2018.
- Coal sales were 1.1 million tons, which was an increase of 0.4% compared to the first quarter of 2018.
- Total revenues and coal revenues of
$58.7 millionand $57.9 million, respectively, compared to $54.8 millionand $54.3 million, respectively, for the same period of 2018.
- Coal revenues per ton of
$53.71compared to $50.60for the first quarter of 2018, an increase of 6.2% as we experienced an increase in contracted sale prices across all segments during the first quarter of 2019.
- Cost of operations of
$54.6 millioncompared to $49.7 millionfor the same period of 2018 due to the increases in costs at several of the operations for labor, contract services and roof support in the first quarter of 2019.
- Cost of operations per ton of
$50.73compared to $46.29for the first quarter of 2018, an increase of 9.6%. The increase was primarily the result of increases in cost of operations as discussed above.
Total coal revenues increased approximately 6.6% and coal revenues per ton increased approximately 6.2% primarily due to higher contracted prices for tons sold across all segments during the first quarter of 2019. Total cost of operations increased by 10.1% during the first quarter of 2019 primarily due to the increases in operating costs as discussed above.
The Partnership produces and markets coal from surface and underground mines in
|(In millions, except per ton data and %)||First Quarter 2019||First Quarter 2018||% Change* 1Q19 / 1Q18|
|Coal revenues per ton*||$||77.29||$||67.43||14.6||%|
|Cost of operations||$||26.6||$||26.9||(1.0||%)|
|Cost of operations per ton*||$||68.37||$||58.67||16.5||%|
|Coal revenues per ton*||$||50.19||$||41.14||22.0||%|
|Cost of operations||$||6.8||$||5.1||33.4||%|
|Cost of operations per ton*||$||56.60||$||57.21||(1.1||%)|
|Coal revenues per ton*||$||36.61||$||35.95||1.9||%|
|Cost of operations||$||7.2||$||6.0||19.8||%|
|Cost of operations per ton*||$||30.35||$||26.87||13.0||%|
|Coal revenues per ton||$||39.49||$||38.67||2.1||%|
|Cost of operations||$||14.5||$||12.0||21.0||%|
|Cost of operations per ton||$||44.17||$||40.01||10.4||%|
|Coal revenues per ton||n/a||n/a||n/a|
|Cost of operations||($||0.5||)||($||0.3||)||39.4||%|
|Cost of operations per ton||n/a||n/a||n/a|
|Coal revenues per ton*||$||53.71||$||50.60||6.2||%|
|Cost of operations||$||54.6||$||49.7||10.1||%|
|Cost of operations per ton*||$||50.73||$||46.29||9.6||%|
* Percentages, totals and per ton amounts are calculated based on actual amounts and not the rounded amounts presented in this table.
** The activities performed by Rhino’s ancillary businesses do not directly relate to coal production. As a result, coal revenues per ton and costs of operations per ton are not presented for the Other category.
Additional information for the Central Appalachia segment detailing the types of coal produced and sold, premium high-vol met coal and steam coal, is presented below. Note that the Partnership’s Northern Appalachia, Rhino Western and
|(In thousands, except per ton data and %)||First Quarter 2019||First Quarter 2018||% Change* 1Q19 / 1Q18|
|Met coal tons sold||149.1||212.5||(29.8||%)|
|Steam coal tons sold||240.2||245.9||(2.3||%)|
|Total tons sold||389.3||458.4||(15.1||%)|
|Met coal revenue||$||16,698||$||19,251||(13.3||%)|
|Steam coal revenue||$||13,389||$||11,662||14.8||%|
|Total coal revenue||$||30,087||$||30,913||(2.7||%)|
|Met coal revenues per ton||$||111.98||$||90.58||23.6||%|
|Steam coal revenues per ton||$||55.75||$||47.43||17.5||%|
|Total coal revenues per ton||$||77.29||$||67.43||14.6||%|
|Met coal tons produced||122.5||126.5||(3.2||%)|
|Steam coal tons produced||308.8||280.9||10.0||%|
|Total tons produced||431.3||407.4||5.9||%|
* Percentages are calculated based on actual amounts and not the rounded amounts presented in this table.
First Quarter 2019 Financial and Operational Results Conference Call
The Partnership will not host a conference call this quarter. Any inquiries can be made to the Partnership’s investor relations department.
Forward Looking Statements
Except for historical information, statements made in this press release are “forward-looking statements.” All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Rhino expects, believes or anticipates will or may occur in the future are forward-looking statements, including the statements and information included under the heading “Coal Operations Update.” These forward-looking statements are based on Rhino’s current expectations and beliefs concerning future developments and their potential effect on Rhino’s business, operating results, financial condition and similar matters. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting Rhino will turn out as Rhino anticipates. Whether actual results and developments in the future will conform to expectations is subject to significant risks, uncertainties and assumptions, many of which are beyond Rhino’s control or ability to predict. Therefore, actual results and developments could materially differ from Rhino’s historical experience, present expectations and what is expressed, implied or forecast in these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the following: Rhino’s future levels of indebtedness, liquidity and compliance with debt covenants; volatility and recent declines in the price of Rhino’s common units; decline in coal prices, which depend upon several factors such as the supply of domestic and foreign coal, the demand for domestic and foreign coal, governmental regulations, price and availability of alternative fuels for electricity generation and prevailing economic conditions; declines in demand for electricity and coal; current and future environmental laws and regulations, which could materially increase operating costs or limit Rhino’s ability to produce and sell coal; extensive government regulation of mine operations, especially with respect to mine safety and health, which imposes significant actual and potential costs; difficulties in obtaining and/or renewing permits necessary for operations; the availability and prices of competing electricity generation fuels; a variety of operating risks, such as unfavorable geologic conditions, adverse weather conditions and natural disasters, mining and processing equipment unavailability, failures and unexpected maintenance problems and accidents, including fire and explosions from methane; poor mining conditions resulting from the effects of prior mining; the availability and costs of key supplies and commodities such as steel, diesel fuel and explosives; fluctuations in transportation costs or disruptions in transportation services, which could increase competition or impair Rhino’s ability to supply coal; a shortage of skilled labor, increased labor costs or work stoppages; Rhino’s ability to secure or acquire new or replacement high-quality coal reserves that are economically recoverable; material inaccuracies in Rhino’s estimates of coal reserves and non-reserve coal deposits; existing and future laws and regulations regulating the emission of sulfur dioxide and other compounds, which could affect coal consumers and reduce demand for coal; federal and state laws restricting the emissions of greenhouse gases; Rhino’s ability to acquire or failure to maintain, obtain or renew surety bonds used to secure obligations to reclaim mined property; Rhino’s dependence on a few customers and its ability to find and retain customers under favorable supply contracts; changes in consumption patterns by utilities away from the use of coal, such as changes resulting from low natural gas prices; changes in governmental regulation of the electric utility industry; defects in title in properties that Rhino owns or losses of any of its leasehold interests; Rhino’s ability to retain and attract senior management and other key personnel; material inaccuracy of assumptions underlying reclamation and mine closure obligations; and weakness in global economic conditions.
Other factors that could cause Rhino’s actual results to differ from its projected results are described in its filings with the
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Rhino undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, unless required by law.
|RHINO RESOURCE PARTNERS LP|
|UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION|
|March 31,||December 31,|
|Cash and cash equivalents||$||4,201||$||6,172|
|Accounts receivable, net of allowance for doubtful accounts ($0.7 million as of March 31, 2019 and December 31, 2018).||16,981||15,126|
|Advance royalties, current portion||366||548|
|Investment in available for sale securities||-||1,872|
|Prepaid expenses and other||2,132||2,766|
|Total current assets||35,100||33,057|
|PROPERTY, PLANT AND EQUIPMENT:|
|At cost, including coal properties, mine development and construction costs||450,591||450,888|
|Less accumulated depreciation, depletion and amortization||(282,437||)||(277,029||)|
|Net property, plant and equipment||168,154||173,859|
|Operating lease right-of-use assets (net)||13,523||-|
|Advance royalties, net of current portion||8,366||8,026|
|Deposits - Workers' Compensation and Surety Programs||8,266||8,266|
|Other non-current assets||25,160||25,410|
|LIABILITIES AND EQUITY|
|Accrued expenses and other||10,840||10,107|
|Accrued preferred distributions||300||3,210|
|Current portion of lease liabilities||3,175||-|
|Current portion of long-term debt||3,057||2,174|
|Current portion of asset retirement obligations||465||465|
|Total current liabilities||38,651||30,141|
|Long-term debt, net||21,208||22,458|
|Asset retirement obligations, net of current portion||18,388||18,084|
|Operating lease liabilities, net of current portion||9,971||-|
|Other non-current liabilities||41,495||41,500|
|Total non-current liabilities||91,062||82,042|
|COMMITMENTS AND CONTINGENCIES|
|Investment in Royal common stock||(4,126||)||(4,126||)|
|Common unit warrants||1,264||1,264|
|Total partners' capital||128,856||136,435|
|RHINO RESOURCE PARTNERS LP|
|UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND|
|(in thousands, except per unit data)|
|Ended March 31,|
|COSTS AND EXPENSES:|
|Cost of operations (exclusive of depreciation, depletion and|
|amortization shown separately below)||54,646||49,653|
|Freight and handling costs||1,155||904|
|Depreciation, depletion and amortization||5,549||5,427|
|Selling, general and administrative (exclusive of depreciation,|
|depletion and amortization shown separately above)||2,743||2,696|
|Loss/(gain) on sale/disposal of assets, net||222||(2,937||)|
|Total costs and expenses||64,315||55,743|
|(LOSS) FROM OPERATIONS||(5,578||)||(943||)|
|INTEREST AND OTHER (EXPENSE)/INCOME:|
|Interest expense and other||(1,701||)||(1,885||)|
|Interest income and other||-||7|
|Total interest and other (expense)||(1,701||)||(1,878||)|
|(LOSS) BEFORE INCOME TAXES||(7,279||)||(2,821||)|
|General partner's interest in net (loss)||$||(32||)||$||(13||)|
|Common unitholders' interest in net (loss)||$||(6,941||)||$||(2,856||)|
|Subordinated unitholders' interest in net (loss)||$||(606||)||$||(252||)|
|Preferred unitholders' interest in net income||$||300||$||300|
|Net (loss)/income per limited partner unit, basic:|
|Net (loss)/income per limited partner unit, diluted:|
|Weighted average number of limited partner units outstanding, basic:|
|Weighted average number of limited partner units outstanding, diluted:|
Reconciliations of Adjusted EBITDA
The following tables present reconciliations of Adjusted EBITDA to the most directly comparable GAAP financial measures for each of the periods indicated (note: DD&A refers to depreciation, depletion and amortization).
|($ in millions)||First Quarter 2019||First Quarter 2018|
|Depreciation, depletion and amortization (DD&A)||5.5||5.4|
|Plus: Loss from sale of non-core asset (1)||0.7||-|
|Three Months Ended March 31,|
|($ in millions)||2019||2018|
|Net cash provided by operating activities||$||0.5||$||8.4|
|Gain on sale of assets||-||2.9|
|Decrease in net operating assets||0.7||7.5|
|Loss on sale of assets||0.2||-|
|Amortization of advance royalties||0.4||0.3|
|Amortization of debt issuance costs||0.5||0.4|
|Amortization of common unit warrants||0.1||0.1|
|Loss on retirement of advanced royalties||0.1||0.1|
|Accretion on asset retirement obligations||0.3||0.3|
|Plus: Loss from sale of non-core assets (1)||0.7||-|
(1) During the three months ended
Source: Rhino Resource Partners LP