Alliance Resource Partners LP (ARLP) 2014 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second-quarter 2014 Alliance Resource Partners and Alliance Holdings GP earnings conference call. My name is Jackie and I will be your coordinator for today. (Operator Instructions).

I would now like to turn the conference over to Mr. Brian Cantrell, Senior Vice President and Chief Financial Officer. Please proceed, sir.

Thank you, Jackie, and welcome, everyone. Earlier this morning we released 2014's second-quarter earnings for both Alliance Resource Partners, or ARLP, and Alliance Holdings GP, or AHGP and we will now discuss these results as well as our outlook for 2014. Following our prepared remarks we will open the call to your questions.

Before beginning a reminder that some of our remarks may include forward-looking statements that are subject to a variety of risks, uncertainties and assumptions which are contained in our filings from time to time with the Securities and Exchange Commission and are also reflected in today's press releases. While these forward-looking statements are based on information currently available to us, if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect, actual results may vary materially from those we projected or expected.

In providing these remarks neither partnership has any obligation to publicly update or revise any forward-looking statement whether as a result of new information, future events or otherwise. Finally, we will also be discussing certain non-GAAP financial measures. Definitions and reconciliations of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures are contained at the end of the ARLP press release, which has been posted on ARLP's website and furnished to the SEC on Form 8-K.

Now that we are through the required preliminaries, I will start with a financial review of the Partnership's operating and financial results for the most recent quarter in the first six months of 2014 and then I'll turn the call over to Joe Craft, our President and Chief Executive Officer. As noted in our releases this morning, ARLP and AHGP once again delivered strong results, posting new operating and financial records for both 2014 quarter and year to date. At AHGP net income rose 26.8% to a record $77.3 million for the 2014 quarter and 19.7% for a record $144.8 million for the first half of 2014.

ARLP's revenue increased 8.1% compared to the 2013 quarter climbing $45 million to a record $598.6 million while revenues climbed to a record $1.14 billion for the first half of 2014, an increase of 3.5% over the comparable period in 2013. Growth in coal sales revenues during the 2014 quarter was led by strong sales performance in the Illinois Basin at our Dotiki River and Gibson North as well as the startup of coal production at our new Gibson South mine.

In Appalachian, higher production at our Tunnel Ridge longwall mine and at MC Mining also contributed to record coal sales volumes of 10.4 million tons, an increase of 5.6% compared to the 2013 quarter. These increases also contributed to record volumes for the first half of 2014 as tons sold climbed to 19.9 million tons and tons produced increased to 20 million tons.

On the strength of record revenues ARLP also reported record EBITDA of $213 million for the 2014 quarter, an increase of 19.4% compared to the 2013 quarter and $403.5 million for the first six months of 2014, a jump of 14.8% over the first half of last year. Net income was also higher compared to the 2013 quarter and first half, climbing 32.3% to a record $137.7 million in the 2014 quarter and 22.5% to a record $253.6 million year to date.

Increased longwall production at Tunnel Ridge along with strong performance at Dotiki and MC Mining drove ARLP's consolidated production cost per ton lower in the 2014 quarter as total segment adjusted EBITDA expense per ton declined approximately 4% quarter over quarter. Reflecting strong year-to-date operating performance, year-to-date segment adjusted EBITDA expense per ton has also been better than originally anticipated. As a result we are now estimating 2014 cost per ton will be 1% to 2% lower than in 2013.

Turning to the top line, we continue to expect average coal sales price realization in 2014 will be comparable to last year. Based on our current expectations we now anticipate ARLP's results for the second half of 2014 should be comparable to our performance year to date.

I'll wrap up my comments this morning with a quick look at the balance sheet. ARLP's liquidity at the end of the 2014 quarter remains strong at approximately $544 million and our leverage of a very comfortable 1.06 times total debt to trailing 12 months EBITDA. We continue to believe that ARLP's solid balance sheet and cash flow leave us well-positioned to execute our current plans and take advantage of additional opportunities that may arise.

With that let me turn the call over to Joe for his take on the second-quarter performance and our perspectives on the coal markets. Joe?

Thank you, Brian, and good morning, everyone. As Brian just reviewed both ARLP and AHGP added to their history of delivering exceptional results by posting new operating and financial benchmarks for the 2014 quarter and the first half of 2014.

Once again, ARLP's teams have demonstrated their ability to effectively execute our growth strategy and deliver long-term value to ARLP and AHGP unitholders despite a challenging environment for the coal industry. Operationally, performance at Tunnel Ridge continues to improve as production was again higher both quarter-over-quarter and sequentially. The mine remains on track to produce approximately 6 million tons this year, an increase of approximately 2.3 million tons over last year.

We are experiencing better-than-anticipated mining conditions at our new Gibson South mine and we now expect to produce approximately 880,000 tons from that mine this year. Working closely with our customers and transportation service providers, our marketing and operating teams did a tremendous job of bringing ARLP's year-to-date coal shipments deck on schedule, driving coal inventories down significantly and substantially overcoming the weather-related delays that impacted the first quarter of this year. Their efforts contributed to record sales volumes, revenues, EBITDA and net income at ARLP and record net income at AHGP.

During the 2014 quarter our marketing team also continued to build on ARLP's already solid contract position, securing new coal sales agreements for the delivery of approximately 8.1 million tons through 2017. These agreements bring our total new coal sales commitments to approximately 15.9 million tons since the beginning of the year.

ARLP is essentially sold out in 2014 and has commitments for approximately 70% to 80% of anticipated sales volumes in 2015.

Turning for a moment to the current state of the US thermal coal markets, conditions this year have generally improved but remain challenging due to the cooler temperatures experienced so far this summer. Year-to-date US power generation has increased 2.5% over 2013 with coal generation up roughly 6% accounting for approximately 41% of the domestic generation mix during this period.

On the supply side, utility stockpiles have declined as coal production remains muted with year-to-year production down slightly compared to 2013. Over the near-term we continue to believe that the US supply-demand fundamentals point to improved coal markets. But competition from natural gas and a weak outlook for exports could dampen the potential for meaningful price recovery through the end of 2014.

Longer term, we expect coal to remain a significant provider of baseload electricity in the United States despite EPA's efforts to reduce domestic demand. The industry fundamentals have been challenging for some time now and will continue to be so due to the regulatory uncertainties surrounding the recently proposed greenhouse gas regulations.

Yet ARLP has proven it can succeed notwithstanding these challenges as we are on track to achieve our 14th consecutive year of record results this year. With a proven track record as a reliable, low-cost producer able to meet the needs of our customers with a diversity of operations, coal qualities and transportation options we believe we can continue our record-setting performance in the future as the Gibson South and White Oak mines reach their full potential.

Reflecting ARLP's strong year-to-date performance and our confidence in the future, the Alliance Boards elected to increase distributions to our unitholders for the 25th consecutive quarter. Cash distributions for the 2014 quarter were increased over the sequential quarter by 2.25% at ARLP and by 2.7% at AHGP. Compared to the 2013 quarter, the announced distributions represent an 8.5% increase for ARLP and a 10.8% increase for AHGP.

Going forward, we currently anticipate quarterly distribution growth at ARLP of approximately $0.05 cents annualized and approximately $0.09 to $0.10 annualized at AHGP.

This concludes our prepared comments. We appreciate your continued support and interest in both ARLP and AHGP. So now with Jackie's assistance, we will now open the call to your questions.

(Operator Instructions). James Rollyson, Raymond James.

Good morning, guys, and congratulations on continued outstanding performance. Joe, maybe a little color on your customer attitude. You guys have been able to put away a pretty good amount of coal so far this year and obviously you had a nice, strong start on the gas side of things with the cold winter.

But as things have been cool this summer and gas has drifted back sub-$4, maybe a little color on what conversations are like with customers in terms of talking about booking coal out in 2015, 2016 and beyond? Have they been as wishy-washy as gas prices have been?

I would say that as a result of the cold weather, we did see an increase in activity and a movement to go back a little bit more on a longer-term focus. And as I think we've talked about in our last call, they have started the year wanting to have less of their current-year production, or excuse me, consumption, under contract, so more booking their business at about an 80% of needs basis.

Then when they got caught short in the winter, several of the utilities decided they might want to moderate that back something similar to what they had done in the past. And so we were successful with some of those utilities to get two- to three-year contracts in some cases.

Now as you mentioned, as the weather has become a little coolor and gas prices have dropped, I think that utilities are trying to decide what is the proper mix between going ahead and committing and going longer term. I think specifically to us, we are experiencing most of our customers wanting to go ahead and lock up some tonnage for us at least on a one- to two-year basis, as opposed to trying to do it quarter to quarter.

We feel like that we are definitely going to be in their portfolio and it is to both parties' advantage to go ahead and make those commitments so that planning can be efficient and that they are assured an ability to have us as one of their suppliers. So it continues to be a question that the utilities are focused on but I think as it relates to us we will still continue to have the ability to sign contracts that will be in the one-, two- and three-year range that will allow us to continue to layer out our revenues on a consistent basis similar to what we've been able to do in the past. Even though it might be one year shorter than what it has been in the past, it is still more with long-term focus in mind, or stability in mind.

Great, thanks for that color, Joe. Appreciate that. Are we still on track for White Oak to start up somewhere around October?

Yes, we still believe that they will be starting in the October 1 timeframe, again, plus or minus a month. So they are working hard to try to hit that October date.

Excellent. And last one, Brian, when you mentioned guidance just kind of basically saying second half of the year is probably going to look at an awful lot like the first half of the year, by my math that implies total full-year EBITDA somewhere maybe north of $800 million. Am I hearing that right just in relation to the original guidance for the year, which of course you have been beating, was $660 million to $760 million?

Yes, obviously we didn't change our guidance ranges. But we are pretty comfortable that the second half of the year will also be strong. If you are looking at it on a quarter-to-quarter basis, third quarter will directionally be similar to what we saw in the first quarter and fourth quarter will be more similar to what we saw in the second quarter.

Remember as we are going into the balance of the year we did have a one-off with regard to the insurance settlement on the Onton event last year that won't be duplicated in the second half. And then the second half of the year also tends to be burdened a bit more with miners' vacation, holidays, etc. So that's where we are.

Perfect. Appreciate it. Thanks, guys.

John Bridges, JPMorgan.

Morning, Joe. Hi, Brian, everybody. I just wanted to get a bit more into the White Oak outlook.

What sort of things should we expect in your accounts in the second half to come from there? We've got royalties and the development costs coming through, what sort of numbers should we expect to see?

Yes, I think this quarter we saw roughly $4.6 million hit the other revenues line from throughput and royalties. Until the longwall starts that run rate, as we are in development production, is probably going to be fairly similar.

On the equity loss flowthrough I think we have maintained our belief that we will be at roughly $32.5 million for the full year. That really hasn't changed.

So probably until the longwall starts and it hits its stride on production it is going to be fairly similar for the balance of this year as we have seen so far this year. You will really begin seeing the ramp-up in cash flows and operating revenues as longwall production starts and as our investments are completed.

And some of the results from this quarter came through with the improved volumes were offsetting some of the margin pressure. How long should we expect that to carry on? What short of growth are you looking for the next couple of years?

I think as we look at our growth over the next two years in 2015 we will see the benefit of the Gibson South tonnage coming through. So we believe that will provide continued growth into 2015.

As we look at our margins we believe our revenues, currently we are forecasting those to be comparable to what we see in 2014 and our cost would be up slightly in 2015 just reflecting inflationary-type pressure. In 2016 we should see the cash flows really escalating at White Oak, so we see growth from White Oak delivering the numbers as far as cash flow.

Their tons, again, are not reflective in our numbers since our accounting reflects White Oak as an investment. But from a cash flow standpoint we will continue to see growth in 2016 additive to what we have in 2015.

As we look at cost of revenues going out that far it is a little bit more uncertain. However, based on our market reads we believe again we can maintain margins with maybe some slight inflationary pressure on cost.

But we are confident that our record of the past 14 years we can continue to build on that. So my commitment and our goal is to have another record year in 2015 and another one in 2016 and let's keep on going. I like it.

We like it too. Could you talk a little bit about what sort of cost pressures you are seeing and how you are controlling them? I know it's a big topic particularly for some of the higher cost mines.

I think from our perspective it all comes back to productivity and our cost because of our scale and the maturity of our mines is rather predictable as long as the geology is consistent and predictable. So our challenge usually comes on the cost side when we face some geologic conditions that we didn't anticipate.

So we just put a significant amount of time and interest into drilling and mine planning so that we can put ourselves in a position to have consistent productivity as fast as possible in the coal business. So that's our biggest pressure point on the cost side in this environment that we are dealing with today.

Okay, great. Thanks again, Joe, Brian. Well done.

Mark Levin, BB&T Capital Markets.

Congratulations again on a very strong quarter. I wanted to shift a little bit to pricing.

Maybe if you can give us some market color about where Illinois Basin prices are today as you contract them versus maybe where they were before the winter started? And just general direction from a pricing perspective.

Yes, we have seen the Illinois Basin pricing be a little stronger as the year has progressed. I would say it is fair to say that towards the end of last year we were at a low point, or doing 2013 we were at a low point. So as we have moved into 2014, pricing has become firmer.

At the same time it is far from being robust. But it does allow us with the current contracts combined with the strength of our existing contracts, that's what allows us to maintain our revenue on a year-over-year basis to be comparable, when you look at it consolidated.

The benefits that we have are the increase of our production coming from Tunnel Ridge and coming from our Gibson mines. Those are two quality products that do command a premium to what you would see in the Illinois Basin. So when you think in terms of looking at Illinois Basin market and how we are participating in that you need to bear in mind that a lot of our growth there is in a product that because of its lower sulfur content does in fact attract a premium in the marketplace.

Likewise, at Tunnel Ridge because of its transportation advantage and high BTU, it too can bring an attractive price relative to today prices as well, which is, in fact, higher than Illinois Basin. Again, due to transportation and BTU components.

Yes, and Joe, that's a good sort of lead-in. When you think about -- I realize you guys don't disclose pricing in 2015 and 2016, but when you think about what revenue per ton, I think you mentioned you're 70% to 80% contracted in 2015, which probably gives you some pretty good visibility, feel comfortable with revenue per ton being up as a whole across the whole portfolio? Up in 2015 over 2014, or is it looking more flattish?

I would say it is flat to up. We've got ranges on where we think the markets would be.

So if you look at those ranges it would probably straddle 2014, so I would say it straddles it. It could be up slightly, it could be down slightly but I would model year-over-year prices being flat.

Okay, great.

It just depends on where the remaining 20% to 30% actually ends up.

And how the rest of the year goes. What the market had anticipated was the natural gas storage being a little light and therefore more gas-to-coal switching. And I think with the gas prices dropping that may not materialize.

But then if we start to have a cold winter then that is going to make -- that's going to exacerbate the situation there to where we could see strength in coal prices because of gas price volatility. But it's going to be pretty much weather dependent and gas price dependent as to how the rest of the year shakes out.

When you look out to 2016, which I realize is, we are halfway through 2014 so I guess not that far away, some concern would be that as some of the order contracts roll off, of course offset by some of the factors that you had mentioned before, that pricing per ton would take a -- or could potentially take a larger step down in 2016.

Realizing that's a long ways away, how would you address someone's concern about looking out into the future when maybe some of these other contracts have rolled off?

We think that in the markets where we are located that there will be some continued demand increase as more central App comes off-line. We believe that from a supply standpoint we should be pretty much in balance if not a little short. But with the existing capital that is being committed I think the catalyst to watch is whether other people want to bring more tonnage into the market.

If that were the case it would put pressure on us being able to sustain these type of revenues. But if the supply is consistent with what has been announced and no more, I think we are going to be in balance. And that will allow for the markets to give us a little bit more of a price increase that will allow us to maintain that position.

What we are trying to do on the cost side is look at, depending on which markets go where, how can we position ourselves to meet the market demand that put our units in the lowest-cost position possible. So we are going back and studying our mine plans to determine how we react depending on what the markets are, so that we can continue to maintain the cash flow and generate the record results year in, year out. So --

One last question and then I will -- I've probably taken up too much time. Do you worry at all, Joe, about the export markets and the weakness there and some of the Illinois Basin tons that return and obviously White Oak, which you guys are participating in and is a lower cost producer, that is ramping but you've got another competitor that has a lot of permitted excess capacity at the moment? Do you worry a little bit about what that might mean for pricing over the next couple of years?

We think that that has been part of the issue as to why prices haven't moved today. So I think the lack of export shipments and probably more importantly the commitments that were made where the traders have brought that tonnage back into the marketplace has had an impact.

So I think as those commitments, those past commitments expire, which should happen in the 2015 timeframe, we think that will stabilize the markets instead of put pressure on the markets. So, no, I don't worry about it. I think that that really just creates upside to our view.

So if the export markets come back then we will be in a stronger position. So we're not counting on a return to the export markets when I'm speaking to you about having stable pricing on a consolidated basis we are not factoring in a return of any export tonnage of any significance.

Fantastic. Great, thank you very much.

(Operator Instructions). Paul Forward, Stifel.

Good morning. Joe, I just wanted to ask just a little clarification on your last sentence in your prepared remarks. You talked about a $0.05 annualized distribution growth.

I just wanted to clarify on that that you're currently at $0.625 and so a year from now if that goes according to plan you would then be at $0.675, so approximately a 8% growth. Is that the right way to --?

No. What we are saying -- in the past we have sort of said 2%. And as we sit in the boardroom and talk about that we and we are starting to go five digits and the routing starts to become complicated.

So what we are trying to do is target 5% annualized. So if you look at the $0.625 --

$0.05 annualized.

$0.05 annualized, I'm sorry. So when you look at the $0.625 per unit, that equates to $2.50 annualized.

So if you look at last quarter is was $2.45 annualized. So you could expect next quarter would be at $2.55 annualized.

Okay.

That's what we are saying. And then the cash flow that goes through for the IDRs as well as the LP interest in AHGP, we are essentially paying that out 1 to 1. And it will vary --

Again, because of rounding.

Again, because of rounding to where if you look at the AHGP, they're $3.48 annualized this quarter. Next quarter would be $3.57, or $3.58 depending on quarter by quarter how it sort of rounds out.

So does that help you understand? It's still roughly 2% but it's not precisely 2% per quarter.

Okay. And I guess just as a follow-up on that, the coverage is very strong especially with the execution as good as it has been for the last couple of quarters. I was just wondering if you could discuss what might allow a stronger distribution growth than that target rate over the next year or so?

Would you need a significant confirmation and a coal market recovery to consider it? Or do you think you've got the potential to have further strong execution drive similar results that could allow something greater than that level of distribution growth?

Our caution is just back to the demand for coal. So we've got a government that is trying to reduce demand. We are of the view the greenhouse gas regulations will not be implemented in their current form.

And it will take several years to understand what really the final rules will or will not be, whether we will have them or whether we won't and what they will be. So in large part of our hesitancy to jump out there with a higher distribution even though we could with our distribution coverage ratio, is really to try to understand what is happening to the demand side of our business relative to government regulations.

And I think that would impact that view probably elections matter as to what would happen in 2014, as to where the direction of the country is going to go and then obviously that would portend possibly where America is relative to 2016. But what we have seen with the proposed greenhouse gas regulations, we have really started to see states that are affected, actually starting to pay attention to what these regulations are doing.

Even with the Mercury Rule, which is the most expensive regulation ever passed, ever adopted in this country, it seems as if a lot of the consuming states that are being impacted by that really didn't appreciate what that was going to mean. They are starting to realize that now, they are starting to realize the impact of what these greenhouse gas regulations may mean to them as they now have the challenge to try to craft the bill or the regulations that they're going to have to live with to try to meet these standards that the EPA has put out.

So in large part as we have looked at the future we have assumed that they are not going to be successful. And we have assumed that our demand is in fact -- even though overall demand is going to be flat, we think the demand in our basins where we operate will have the opportunity to grow a little bit especially with increased capacity utilization to where we can say with confidence that we focus on growing at the pace we have and capturing record years in 2015, 2016, 2017, etc.

But what could derail that is government coming in and significantly impacting demand and/or utilities, deciding I don't know what's going to happen, there is so much uncertainty, I'm going to make some decisions to take economic plants off-line, similar to what PDA did, or is planning to do where they have taken two units off-line that should not be taken off in our view -- back to economics. But they were pressured to do so for political reasons, in my opinion.

So that's the area that we want to watch. We just don't want to get ahead of ourselves too far to where -- until we have some clarity in that area.

All right, thanks for the comments there. I guess I would just --

I do believe, I think that we are focused on continuing at that pace as we have talked about the $0.05 annualized for ARLP and the $0.09 to $0.10 for AHGP. And we think we can do that year in, year out, hopefully.

Thinking about the -- obviously you've got policy uncertainty and headwinds but you had mentioned that a cool summer comes in, lower natural gas prices come in and threaten some of the outlook for 2015 and I think you talked about exports as well. Is it just a more dynamic market today and would, therefore, could we expect a more cautious almost like a permanently cautious outlook on what kind of distribution coverage you would expect when you consider how different the market is today compared to where it might have been historically that would argue for keeping a stronger coverage ratio?

Well, I don't know if I would characterize it to keep a stronger one. We have been fortunate to have outstanding performance to where it has resulted in a stronger coverage ratio.

So I don't anticipate we are going to adjust distributions to a higher coverage ratio than what we have done historically. So I think we can still go down to on our coverage ratio and sustain our distributions unless we start seeing significant impact to demand that we don't anticipate.

So I think we are just being cautious until it gets clear. I think there will be more volatility back, the utilities not contracting as much and I would like to see them continue to do at least three-year contracts. If they would consistently do that that could change our view on how aggressive we would get on distributions.

But until we start seeing -- again, I think all of this uncertainty is created by government regulations. And we just need some leadership and some certainty to where we know that when the government says we are going to have 30% of our coal, or electricity generated by coal, then start acting that way.

So it gives people certainty so they can plan around that instead of this constant pressure to not want to build any coal-fired power plants, as an example. So I'm not sure if I'm answering your question but we are trying to be as prudent as we can be with a commitment in no less than what we have had from day one is to grow our production at a 10%-a-year clip and get that market share at margins that allow us to continue a record year, year in, year out with stable cash flow.

And we see visibility for that through the next five years but it is going to be harder as long as the government keeps putting out policies that raise the bar a little bit for us. But that doesn't discourage us from just being laser focused to deliver the results that we have all come to enjoy and expect. And that goes through every employee in our Company.

So we are committed. And we believe we can deliver. And we really appreciate everybody's interest in us and your support for us in encouraging us to keep that focus.

Okay. While I would like to ask a smaller follow-up question then, which is just wanted to ask about you did a great job during the quarter in pulling your old inventories down, I was wondering if you could talk a little bit about the Illinois Basin in particular?

Are you seeing anything on customer inventories that would be affected by rail transportation issues or some improvement there and combine that with this mild summer? Can you characterize what you are seeing at customer inventories just nearby in the Illinois Basin over the last couple of months?

I think that we have not been as impacted in the Illinois Basin as say the Powder River Basin for transportation issues. At the same time we have definitely lost some demand in 2014 because utilities selected to reduce their coal generation strictly because of inventory issues.

And as we think through the summer, on the summer side you still have coal being your base load and gas usually gets the benefit of a real hot summer because they are the peakers. So we don't think it has impacted total demand for the year greatly.

Obviously it has impacted it somewhat. So as we think of demand in the Illinois Basin for 2014 versus 2013, we see that there is probably going to be a 5 million to 10 million ton draw on inventory from the beginning of 2014 to the end of 2014.

So that means demand is probably 5 million to 10 million more than supply for the year is what we are projecting today. And as we look into 2015 we think that the supply will become greater because of a couple longwalls coming up, one from Foresight and one from White Oak and as well as our Gibson production.

So we think with that supply it is going to bring it back in balance even with another 5 million more demand increase in 2015 compared to 2014. So 5 million to 10 million draw in 2014 and a balance in 2015 is what we are projecting at this moment.

Great. Thanks a lot, Joe.

And ladies and gentlemen, with no further questions I would like to turn the call over to Mr. Joe Craft for closing remarks.

Thank you. In conclusion, I would like to dedicate this quarter to Robert E. Thomas who is the founder of MAPCO, Inc., what was a Fortune 500 company before it was acquired by the Williams Company in the late 1990s. Today is Bob's 100th birthday.

Bob's vision and leadership started and built MAPCO Coal, our predecessor, whose assets and many of its leaders have formed the foundation for the Alliance Partnerships. I think it's safe to say that without Bob Thomas, we would not be here today talking about the Alliance success story.

So I'd like for you to join me in thanking Bob Thomas for the opportunities he has given to so many of us and join me again in wishing him a very happy 100th birthday. We love you, Bob Thomas.

Thank you, everybody. We appreciate your time this morning as well as your continued support and interest in both ARLP and AHGP.

Our next call is currently scheduled for late October and we look forward to discussing our third-quarter 2014 results with you at that time. Thank you.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect and have a great day.