Following these results, shares of ARLP rose as much as 14.2% pre-market to above $24/share. However, shortly before the open, the stock quickly dropped back below $22/share before stabilizing some.
In recent years, EPA regulation and low natural gas prices hurt the coal industry (thermal coal to be more exact). Thermal coal (aka, steam coal) is used to make electricity and is an alternative for using natural gas and vice versa with natural gas. Metallurgical coal is used in the steel-making process.
The damage EPS regulations and low natural gas price caused on the coal space caused several coal companies to file for bankruptcy. The world's largest coal company, Peabody Energy, filed for bankruptcy last year. Actually, last month, the company emerged from bankruptcy.
Despite all the struggles the coal industry faced, ARLP managed to grow its sales year-over-year, every year between 2000-2014. However, this incredible sales growth slowed when sales decline in 2015 and then in 2016. Sales are forecast to decline again in 2017.
Back to the quarter...
Increased total revenues, lower total operating expenses and higher equity in earnings of affiliates combined to drive net income attributable to ARLP for the 2017 quarter up by 121.7% to $104.9 million, or $1.10 per basic and diluted limited partner unit, while EBITDA climbed 41.5% to $177.7 million, both as compared to the 2016 quarter.
Coal sales revenues for the 2017 quarter increased 9.3%, compared to the 2016 quarter, to $438.7 million due to increased coal sales volumes offset in part by lower coal sales price realizations. For the 2017 Quarter, strong performances at the Gibson South, River View, Hamilton and Tunnel Ridge mines drove total coal sales volumes up 28.9% to 9.6 million tons and production volumes higher by 15.0% to 10.2 million tons, both as compared to the 2016 Quarter.
Coal sales prices decreased approximately 15.2% to $45.65 per ton sold for the 2017 Quarter, compared to $53.82 per ton sold for the 2016 Quarter.
Other sales and operating revenues for the 2017 quarter increased approximately $7.8 million compared to the 2016 Quarter, primarily due to increased mining technology product sales by our Matrix Design subsidiary.
Looking ahead, the company raised guidance for fiscal year 2017 to $1.78-1.82 billion, which falls in-line with current expectations, and is up from prior guidance of $1.71-1.78 billion.
The company also raised its coal production to 38.1-39.1 million tons up from 37.9-38.9 million tons and raises its coal sales volumes forecast to 38.5-39.5 million tons from 37.9-39.2 million.
ARLP has secured volume and price commitments for approximately 35.5 million tons in 2017 and has also secured coal sales and price commitments for approximately 19.0 million tons, 9.1 million tons and 4.3 million tons in 2018, 2019 and 2020, respectively.