Why Alliance Resource Partners, L.P. (NASDAQ: ARLP) stock is falling

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Alliance Resource Partners, L.P. (NASDAQ: ARLP) stock fell 7.15%  on January 27th, 2020 (Source: Google finance) but slightly recovered over 0.3% on 28th January, 2020 (as of 10:01 am GMT-5; Source: Google finance). The company in the fourth quarter of FY 19 has reported the total revenues of $453.3 million compared to $531.8 million for the fourth quarter 2018 mainly due to lower coal sales revenues resulting from reduced coal sales volumes and prices, partially offset by the addition of oil & gas royalty revenues in the 2019 Quarter. Lower total revenues, partially offset by lower total operating expenses, had increased the net income attributable to ARLP for the 2019 Quarter down to $25.8 million, compared to $50.8 million, for the 2018 Quarter. Adjusted EBITDA in the 2019 Quarter was of $126.2 million were lower compared to Adjusted EBITDA in the 2018 Quarter of $136.4 million and $176.8 million, respectively.

Additionally, the company has decreased the quarterly cash distribution to unitholders for the 2019 Quarter to $0.40 per unit (an annualized rate of $1.60 per unit), payable on February 14, 2020 to all unitholders of record as of the close of trading on February 7, 2020. This is compared to quarterly unitholder distributions of $0.53 per unit declared for the 2018 Quarter and $0.54 per unit declared for the quarter ended September 30, 2019.

Meanwhile, for fiscal 2020, the company expects challenging coal market conditions will continue to persist throughout 2020 on the back of low natural gas prices, tepid power demand and elevated stockpiles are likely to keep the industry in an oversupplied position and continue to exert pressure on pricing for the near future. For the oil & gas minerals business, ARLP is anticipating significant organic growth as development of the existing acreage continues in 2020. At the midpoint of the initial 2020 forecasts, the company currently anticipates oil & gas production to increase approximately 52.0% compared to 2019. Oil & gas royalties revenue and Segment Adjusted EBITDA are also projected to be approximately 56.0% and 62.0% higher, respectively. ARLP expects 2020 export sales volumes of approximately 2.8 million tons compared to the 7 million tons sold by ARLP in 2019. The total coal sales volumes for 2020 are expected to be in the range of 36.8 million to 38.8 million tons with coal production estimated to be in the range of 35.5 million to 37.5 million tons, or 3.8% and 8.4% lower respectively at the midpoint of the guidance compared to 2019.

In addition, for fiscal 2020, the company now projects net income to be in a range of $81 – $159 million and revenues is expected to be in a range of $1.65 – $1.77 billion.

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