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Signature Sponsor
May 11, 2019 - 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
Central Appalachia
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 million in the prior year and $36.6 million in 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 $77.29 versus $67.43 in the prior year and $79.07 in 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 $111.98 versus $90.58 in the prior year and $93.63 in the prior quarter. Steam coal revenue in the quarter was $55.75 per ton versus $47.43 in the prior year and $62.54 in the prior quarter.
Cost of operations per ton in the quarter was $68.37 versus $58.67 in the prior year and $65.03 in 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.
Illinois Basin
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 million in the prior year and $12.7 million in the prior quarter. Coal revenues per ton were $39.49 compared to $38.67 in the prior year and $39.54 in 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 $44.17 versus $40.01 in the prior year and $33.98 in 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.
Rhino Western
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 Castle Valley operation.
Coal revenues were $8.7 million versus $8.1 million in the prior year and $9.2 million in the prior quarter. Coal revenues per ton in the quarter were $36.61 versus $35.95 in the prior year and $34.87 in 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 $30.35 versus $26.87 in the prior year and $29.08 in 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 Valley operation.
Northern Appalachia
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 million versus $3.7 million in the prior year and $5.4 million in 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 Hopedale operation. For the first quarter of 2019, coal revenues per ton were $50.19 compared to $41.14 in the prior year and $45.29 in the prior quarter. The increase was primarily due to higher contracted prices for tons sold from the Hopedale complex compared to the prior periods in 2018.
Cost of operations per ton was $56.60 compared to $57.21 in the prior year and $54.00 in 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 Hopedale mining operation.
Capital Expenditures
Maintenance capital expenditures for the first quarter were approximately $1.6 million.
Expansion capital expenditures for the first quarter were approximately $0.4 million.
Overview of Financial Results
Results for the three months ended March 31, 2019 included:
Adjusted EBITDA of $0.6 million and net loss of $7.3 million compared to Adjusted EBITDA of $4.5 million and net loss of $2.8 million in 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 $0.53 compared to basic and diluted net loss per common unit of $0.22 for 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 million and $57.9 million, respectively, compared to $54.8 million and $54.3 million, respectively, for the same period of 2018.
Coal revenues per ton of $53.71 compared to $50.60 for 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 million compared to $49.7 million for 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 $50.73 compared to $46.29 for 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. Segment Information
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.
To read the full results with financial figures included, click here. |
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