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LEXINGTON, KY, May 10, 2019 (GLOBE NEWSWIRE) -- Rhino Resource Partners LP (OTCQB: RHNO) (“Rhino” or the “Partnership”) announced today its financial and operating results for the quarter ended March 31, 2019. For the quarter, the Partnership reported a net loss of $7.3 million and Adjusted EBITDA of $0.6 million, compared to a net loss of $2.8 million and Adjusted EBITDA of $4.5 million in the first quarter of 2018. Diluted net loss per common unit was $0.53 for the quarter compared to diluted net loss per common unit of $0.22 for the first quarter of 2018. Total revenues for the quarter were $58.7 million, with coal sales generating $57.9 million of the total, compared to total revenues of $54.8 million and coal revenues of $54.3 million in the first quarter of 2018. (Refer to “Reconciliations of Adjusted EBITDA” included later in this release for reconciliations to the most directly comparable GAAP financial measures).
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 March 31, 2019.
Rick Boone, President and Chief Executive Officer of Rhino’s general partner, stated, “We continued to generate positive cash flow and EBITDA during the first quarter despite experiencing adverse geological conditions at our Central Appalachia mining operations. Total coal revenues increased year-over-year as we continued to see strong prices in the coal markets, especially prices for our met coal. However, cost increases due to adverse geology at our Central Appalachia operations drove cost per ton upward during the first quarter of 2019 compared to last year and increases in labor costs, contract services and higher steel prices for roof support increased costs at our other operations year-over-year.
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 Hopedale mine into the 7-seam reserve area of the mine during the quarter and we expect mining conditions and costs to improve throughout 2019 as we progress the mine into the main body of the 7-seam reserve area. Site construction began for a new ventilation shaft at the Hopedale mine that will provide improved mining conditions for the remaining life of the mine once it is completed in Q2 of 2019. Our Castle Valley mine will complete mining in its current reserve area during the remainder of this year and we will transition this mine to the adjacent Hiawatha coal seam as we move later into 2019. Our Pennyrile operation continues to focus on its costs and productivity as increased steel prices for roof support and higher maintenance costs during the first quarter adversely impacted its operating results.
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
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 Per Ton. Cost of operations per ton sold represents the cost of operations (exclusive of depreciation, depletion and amortization) divided by tons of coal sold. Rhino management uses this measurement as a key indicator of the efficiency of operations.
Overview of Financial Results
Results for the three months ended March 31, 2019 included:
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 Kentucky, West Virginia, Ohio and Utah. For the quarter ended March 31, 2019, the Partnership had four reportable business segments: Central Appalachia, Northern Appalachia, Rhino Western and Illinois Basin. Additionally, the Partnership has an Other category that includes its ancillary businesses.
|(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 Illinois Basin segments currently produce and sell only steam coal.
|(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.
About Rhino Resource Partners LP
Rhino Resource Partners LP is a diversified energy limited partnership that is focused on coal and energy related assets and activities, including energy infrastructure investments. Rhino produces metallurgical and steam coal in a variety of basins throughout the United States. Additional information regarding Rhino is available on its web site – RhinoLP.com.
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 Securities and Exchange Commission, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
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 March 31, 2019, we sold parcels of land owned in western Colorado for proceeds less than our carrying value of the land that resulted in a loss of approximately $0.7 million. This land is a non-core asset that we chose to monetize despite the loss incurred. We believe that the isolation and presentation of this specific item to arrive at Adjusted EBITDA is useful because it enhances investors’ understanding of how we assess the performance of our business. We believe the adjustment of this item provides investors with additional information that they can utilize in evaluating our performance. Additionally, we believe the isolation of this item provides investors with enhanced comparability to prior and future periods of our operating results.