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Signature Sponsor
March 13, 2019 - Rhino Resource Partners LP (OTCQB: RHNO) (“Rhino” or the “Partnership”) announced today its financial and operating results for the quarter ended December 31, 2018. For the quarter, the Partnership reported a net loss of $5.6 million and Adjusted EBITDA of $6.3 million, compared to a net loss of $18.7 million and Adjusted EBITDA of $6.7 million in the fourth quarter of 2017. Diluted net loss per common unit was $0.49 for the quarter compared to diluted net loss per common unit of $1.45 for the fourth quarter of 2017. Total revenues for the quarter were $64.7 million, with coal sales generating $63.9 million of the total, compared to total revenues of $55.8 million and coal revenues of $55.4 million in the fourth quarter of 2017.
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 December 31, 2018.
Rick Boone, President and Chief Executive Officer of Rhino’s general partner, stated, “During the fourth quarter, we saw rail service return to normal levels as the backlog that began early in 2018 seems to have finally been cleared, which contributed to increased sales year-over-year. We continue to experience cost pressures as escalating steel prices have increased our roof support costs as well as increases in fuel pricing, both of which affected our margins. For 2019, we are seeing coal prices remain steady based on recent trends and 2019 prices have improved across all our business segments for both met and thermal coal. We have over 90% of our 2019 coal production contracted at prices exceeding 2018 levels. In particular, met coal prices have improved both domestically and internationally. In addition, we have seen thermal coal pricing improve in our CAPP and NAPP segments year-over-year as well. We left a portion of our met coal production uncontracted in 2019 as we believe there will be opportunities to sell coal on the spot market for prices that could exceed our current contracted pricing levels.
In Central Appalachia, approximately 82% of our full-year 2019 thermal and met coal production has been contracted at increased prices compared to this year. Our Pennyrile, Castle Valley and Hopedale operations are substantially sold out for 2019 at prices that are above our current year levels. In addition, we have executed long-term contracts with various utility customers for thermal coal for 2020 at both Pennyrile and Castle Valley.
Providing a safe work environment and being responsible environmental stewards are core principles at Rhino. Our commitment to safety was recently recognized as our CAM Mining operating subsidiary in West Virginia received the “Mountaineer Guardian Award” from the West Virginia Coal Association in recognition of the significant accomplishments of our employees in the area of mine safety. We are proud of the employees that achieved this recognition and the safety-first culture they have shown as evidenced by this award.
We expect continued strong market demand and increased year-over-year prices at all of our operations to provide positive financial results for 2019, which will bring value to our unitholders.”
Coal Operations Update
Central Appalachia
Sales volume was 462,000 tons in the quarter versus 371,000 tons in the prior year and 525,000 tons in the prior quarter. The increase in sales volume compared to the prior year was the result of increased demand for met and steam coal tons from this region.
Coal revenues were $36.6 million, versus $25.1 million in the prior year and $43.9 million in the prior quarter. The increase in revenue from the prior year was primarily due to the increase in demand for met and steam coal tons sold from this basin. Coal revenues per ton in the quarter were $79.07 versus $67.60 in the prior year and $83.59 in the prior quarter. The increase from the prior year was primarily due to the higher contracted prices for the met and steam coal sold from this region. Metallurgical coal revenue per ton in the quarter was $93.63 versus $85.83 in the prior year and $113.17 in the prior quarter. Steam coal revenue in the quarter was $62.54 per ton versus $53.45 in the prior year and $53.64 in the prior quarter.
Cost of operations per ton in the quarter was $65.03 versus $50.85 in the prior year and $60.75 in the prior quarter. The increase in cost of operations per ton from the prior year was primarily due to the increase in the price of diesel fuel and contract services in the current quarter.
Illinois Basin
Sales volume was 321,000 tons, versus 325,000 tons in the prior year and 319,000 tons in the prior quarter.
Coal revenues were $12.7 million, versus $14.7 million in the prior year and $12.5 million in the prior quarter. Coal revenues per ton were $39.54 compared to $45.18 in the prior year and $39.22 in the prior quarter. The decrease in total coal revenues and coal revenues per ton was primarily due to lower contracted sale prices for tons sold from the Pennyrile mine.
Cost of operations per ton was $33.98 versus $39.39 in the prior year and $43.00 in the prior quarter. The decrease in cost of operations per ton was primarily the result of improved mining conditions compared to the prior quarter and productivity improvements that lowered costs.
Rhino Western
Sales volume was 264,000 tons versus 282,000 tons in the prior year and 293,000 tons in the prior quarter. The decrease in coal sales from the prior periods was due to adverse geological conditions experienced during the fourth quarter resulting in less production and sales from our Castle Valley operation.
Coal revenues were $9.2 million versus $10.3 million in the prior year and $10.3 million in the prior quarter. Coal revenues per ton in the quarter were $34.87 versus $36.49 in the prior year and $35.06 in the prior quarter. Total coal revenues and coal revenues per ton decreased year-over-year due to lower contracted prices for coal sold from the Castle Valley operation.
Cost of operations per ton was $29.08 versus $29.17 in the prior year and $31.35 in the prior quarter. The cost of operations per ton decreased during the current quarter compared to the prior quarter as the transition to an adjacent coal seam at the Castle Valley operation was completed during the third quarter of 2018.
Northern Appalachia
Sales volume was 120,000 tons versus 130,000 tons in the prior year and 119,000 in the prior quarter. The sales volumes from our Hopedale operation decreased as we experienced difficult geological conditions in some areas of the mine.
Coal revenues were $5.4 million versus $5.3 million in the prior year and $5.2 million in the prior quarter.
For the fourth quarter, coal revenues per ton from our Hopedale operation were $45.29 compared to $40.86 in the prior year and $44.05 in the prior quarter. The increase was primarily due to higher contracted prices for tons sold from the Hopedale complex compared to the same period in 2017.
Cost of operations per ton was $54.00 compared to $46.92 in the prior year and $53.33 in the prior quarter. The increase in cost of operations per ton was primarily the result of an increase in costs for outside services and other operating costs as difficult geological conditions were encountered in some areas of the mine at the Hopedale operation.
Capital Expenditures
Maintenance capital expenditures for the fourth quarter were approximately $3.1 million.
Expansion capital expenditures for the fourth quarter were approximately $0.8 million.
Overview of Financial Results
Results for the three months ended December 31, 2018 included:
Adjusted EBITDA from continuing operations of $6.3 million and net loss from continuing operations of $5.6 million compared to Adjusted EBITDA from continuing operations of $7.3 million and net loss from continuing operations of $21.3 million in the fourth quarter of 2017. Adjusted EBITDA decreased period-over-period primarily due to the decrease in net income at the Central Appalachia operations. Including net income from discontinued operations of approximately $2.6 million, total net loss for the three months ended December 31, 2017 was $18.7 million while Adjusted EBITDA was $6.7 million. The Partnership did not incur a gain or loss from discontinued operations for the fourth quarter of 2018.
Basic and diluted net loss per common unit from continuing operations of $0.49 compared to basic and diluted net loss per common unit from continuing operations of $1.63 for the fourth quarter of 2017.
Coal sales were 1.2 million tons, which was an increase of 5.3% compared to the fourth quarter of 2017, primarily due to increased sales from the Central Appalachia mining operations.
Total revenues and coal revenues from continuing operations of $64.7 million and $63.9 million, respectively, compared to $55.8 million and $55.4 million, respectively, for the same period of 2017.
Coal revenues per ton of $54.72 compared to $49.96 for the fourth quarter of 2017, an increase of 9.5% primarily due to the increase in contracted sale prices for tons sold from the Central Appalachia and Northern Appalachia segments.
Cost of operations from continuing operations of $53.5 million compared to $45.5 million for the same period of 2017 as production was increased in the Central Appalachia region to meet the increase demand for met and steam coal during the fourth quarter of 2018. We also experienced cost increases for diesel fuel and contract services at the Central Appalachia mining operations during the current period.
Cost of operations per ton from continuing operations of $45.86 compared to $41.09 for the fourth quarter of 2017, an increase of 11.6%. The increase was primarily the result of increases in operating expenses as discussed above.
Total coal revenues from continuing operations increased approximately 15.4% and coal revenues per ton increased approximately 9.5% primarily due to higher contracted prices for tons sold at our Central Appalachia and Northern Appalachia operations during the fourth quarter of 2018 compared to the same period in 2017. Total cost of production from continuing operations increased by 17.6% during the fourth quarter of 2018 primarily due to an increase of $11.2 million in total cost of operations in Central Appalachia, which was the result of increased demand for met and steam coal from this region. The Partnership also experienced increases in operating expenses such as diesel fuel and contract services.
Results for the year ended December 31, 2018 included:
Adjusted EBITDA from continuing operations of $19.6 million and net loss from continuing operations of $16.0 million compared to Adjusted EBITDA from continuing operations of $27.1 million and net loss from continuing operations of $20.6 million in the year ended December 31, 2017. Including net income from discontinued operations of approximately $1.8 million, which related to our Sands Hill Mining operation sold in November 2017, our net loss was $18.8 million and Adjusted EBITDA was $26.3 million for the year ended December 31, 2017. We did not incur a gain or loss from discontinued operations for the year ended December 31, 2018. Adjusted EBITDA from continuing operations decreased period to period primarily due to the decrease in net income at our Illinois Basin segment resulting from the decrease in the contracted sale prices for tons sold from our Pennyrile mine and an increase in operating costs such as freight and handling, contract services and diesel fuel at our Central Appalachia operations.
Basic and diluted net loss per common unit from continuing operations of $1.35 compared to basic and diluted net loss per common unit from continuing operations of $1.88 for the year ended December 31, 2017.
Coal sales were 4.6 million tons, which was an increase of 11.5% compared to the year ended December 31, 2017, primarily due to increased sales from the Central Appalachia operations.
Total revenues and coal revenues of $247.0 million and $244.3 million, respectively, compared to $218.7 million and $217.2 million, respectively, for the same period of 2017.
Coal revenues per ton of $53.13 compared to $52.64 for the year ended December 31, 2017.
Cost of operations from continuing operations of $213.6 million compared to $178.5 million for the same period of 2017 as production was increased in the Central Appalachia region to meet the increased demand for met and steam coal during the year ended December 31, 2018. The Partnership also experienced increases in the cost of diesel fuel, contract services and equipment maintenance at our Central Appalachia segment during 2018.
Cost of operations per ton from continuing operations of $46.45 compared to $43.26 for the year ended December 31, 2017, an increase of 7.4%, which was primarily the result of increases in operating expenses as discussed above.
Total coal revenues increased approximately 12.5% period-over-period primarily due to an increase in met and steam coal tons sold in Central Appalachia as the Partnership experienced increased demand for met and steam coal from this region during the period. Coal revenues per ton increased by 0.9% compared to the same period of 2017. Total cost of production increased by 19.7% primarily due to an increase of $33.5 million in total cost of operations at our Central Appalachia operations as demand for met and steam coal from this region increased during the year ended December 31, 2018. The Partnership also experienced increases in operating expenses such as diesel fuel, contract services and equipment maintenance during 2018.
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