August 7, 2019 - Rhino Resource Partners LP (OTCQB: RHNO) (“Rhino” or the “Partnership”) announced today its financial and operating results for the quarter ended June 30, 2019. For the quarter, the Partnership reported net income of $0.1 million and Adjusted EBITDA of $7.5 million, compared to a net loss of $3.0 million and Adjusted EBITDA of $4.6 million in the second quarter of 2018. Diluted net loss per common unit was $0.01 for the quarter compared to diluted net loss per common unit of $0.23 for the second quarter of 2018. Total revenues for the quarter were $65.6 million, with coal sales generating $65.1 million of the total, compared to total revenues of $54.9 million and coal revenues of $54.2 million in the second 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 June 30, 2019.

Rick Boone, President and Chief Executive Officer of Rhino’s general partner, stated, “Our positive EBITDA during the second quarter was an improvement over the first quarter despite continued adverse geological conditions at our Central Appalachia mining operations. We expect the adverse geological conditions at our Central Appalachia operations to improve during the remainder of this year. Strong prices in the coal markets, especially met coal prices, resulted in increased coal revenues year-over-year as sales tons remained relatively flat. However, cost increases due to the continued adverse geology at our Central Appalachia operations drove cost per ton upward during the second 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 have contracted for the majority of our coal production at prices exceeding 2018 levels with our only open positions at our Central Appalachia operations for a small portion of our met and steam coal tons. We have received and responded to several customer bid proposals for 2020 business and believe we are well positioned to contract coal sales at very acceptable prices for next year and potentially beyond. Rhino implemented changes in senior mine management at our Central Appalachia and Northern Appalachia operations in the second quarter to emphasize a renewed focus on lowering costs and improving productivity at these operations. We believe these steps and renewed focus on cost controls will lead to improved financial results for the remainder of 2019.

We continued to encounter adverse mining conditions during the quarter at our Remining 3 surface mine in Central Appalachia as we encountered previous, unmapped mining works that resulted in fewer met tons produced than expected, which adversely impacted our financial results. In Northern Appalachia, while we have fully transitioned the Hopedale mine into the 7-seam reserve area of the mine, we encountered sandstone partings in a coal seam during the quarter, which resulted in higher costs than expected. 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. The construction of the new ventilation shaft at Hopedale progressed well during the quarter and the raise-bore shaft recently broke through to the surface at the mine. We expect the construction of the new airshaft will be completed soon and it will provide improved mining conditions for the remaining life of the mine upon its completion. Our Castle Valley mine continued to perform well during the quarter with strong financial results. The Pennyrile operation continues to focus on costs and productivity as higher steel prices for roof support and increased maintenance costs during the quarter adversely impacted this mine’s operating results.

We remain committed to providing a safe working environment for our employees by keeping safety as the top priority at all of our operations. We are proud of our employees who continually promote our safety-first culture as part of our core principles.

We believe our focus on the cost control measures we have implemented and our expectation that the coal markets will remain strong will result in stronger financial results for the remainder of 2019.”

Coal Operations Update

Central Appalachia

    Sales volume was 395,000 tons in the quarter versus 419,000 tons in the prior year and 389,000 tons in the prior quarter. The decrease in sales volume compared to the prior year was primarily due to less customer demand for steam coal from this region.
    Coal revenues were $35.2 million, versus $28.1 million in the prior year and $30.1 million in the prior quarter. Coal revenues per ton in the quarter were $89.08 versus $67.05 in the prior year and $77.29 in the prior quarter. Metallurgical coal revenue per ton in the quarter was $112.26 versus $98.12 in the prior year and $111.98 in the prior quarter. Steam coal revenue in the quarter was $57.89 per ton versus $49.41 in the prior year and $55.75 in the prior quarter. The increase in coal revenues and coal revenues per ton was primarily due to a mix of higher priced met coal tons sold during the second quarter of 2019 compared to the other periods.
    Cost of operations per ton in the quarter was $82.07 versus $55.69 in the prior year and $68.37 in the prior quarter. Cost of operations per ton increased as we experienced an increase in operating costs including labor, contract services and equipment maintenance, in addition to fewer tons of coal sold during the three months ended June 30, 2019 that increased our cost of operations per ton.

Illinois Basin

    Sales volume was 332,000 tons, versus 347,000 tons in the prior year and 329,000 tons in the prior quarter.
    Coal revenues were $13.1 million, versus $13.6 million in the prior year and $13.0 million in the prior quarter. Coal revenues per ton were $39.45 compared to $39.22 in the prior year and $39.49 in the prior quarter. The decrease in total coal revenues was primarily due to the decrease in tons sold from our Pennyrile mine in western Kentucky.  Coal revenues per ton increased primarily due to higher contracted sale prices for tons sold during the second quarter of 2019 compared to the same period in 2018.
    Cost of operations per ton was $41.31 versus $38.86 in the prior year and $44.17 in the prior quarter. The increase in cost of operations per ton was primarily the result of increases in labor and equipment maintenance costs during the three months ended June 30, 2019 compared to the same period in 2018.

Rhino Western

    Sales volume was 224,000 tons versus 241,000 tons in the prior year and 238,000 tons in the prior quarter. The decrease in coal sales from the prior periods was due to a decrease in demand for tons sold from the Castle Valley operation.
    Coal revenues were $8.4 million versus $8.6 million in the prior year and $8.7 million in the prior quarter. Coal revenues per ton in the quarter were $37.62 versus $35.86 in the prior year and $36.61 in the prior quarter. Total 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 $26.32 versus $31.44 in the prior year and $30.35 in the prior quarter. The cost of operations per ton decreased during the current quarter compared to the other periods as we experienced lower operating costs during the second quarter of 2019 at the Castle Valley operation.

Northern Appalachia

    Sales volume was 172,000 tons versus 96,000 tons in the prior year and 121,000 tons 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 $8.4 million versus $3.9 million in the prior year and $6.1 million in the prior quarter. Coal revenues per ton were $48.63 compared to $40.79 in the prior year and $50.19 in the prior quarter. The increase in coal revenues and coal revenues per ton was primarily due to an increase in tons sold from our Hopedale operation and higher contracted sale prices for the tons sold during the second quarter of 2019 compared to the same period in 2018.
    Cost of operations per ton was $49.91 compared to $58.40 in the prior year and $56.60 in the prior quarter. The cost of operations per ton decreased in Northern Appalachia as more tons were sold from this region resulting in fixed costs being allocated to higher tons sold during the three months ended June 30, 2019.

Capital Expenditures

    Maintenance capital expenditures for the second quarter were approximately $2.0 million.
    Expansion capital expenditures for the second quarter were approximately $0.2 million.

Overview of Financial Results

Results for the three months ended June 30, 2019 included:

    Adjusted EBITDA of $7.5 million and net income of $0.1 million compared to Adjusted EBITDA of $4.6 million and net loss of $3.0 million in the second quarter of 2018. Adjusted EBITDA was positively impacted by a gain of $6.9 million from a settlement with a third-party to maintain certain pipelines on designated permits at our Central Appalachia operation but negatively impacted by higher cost of operations discussed above.
    Basic and diluted net loss per common unit of $0.01 compared to basic and diluted net loss per common unit of $0.23 for the second quarter of 2018.
    Coal sales were 1.1 million tons, which was an increase of 1.9% compared to the second quarter of 2018.
    Total revenues and coal revenues of $65.6 million and $65.1 million, respectively, compared to $54.9 million and $54.2 million, respectively, for the same period of 2018.
    Coal revenues per ton of $57.95 compared to $49.19 for the second quarter of 2018, an increase of 17.8% as we experienced an increase in contracted sale prices across all segments during the second quarter of 2019.
    Cost of operations of $59.8 million compared to $49.6 million for the same period of 2018 due to increases in costs at several of the operations for labor, contract services and equipment maintenance in the second quarter of 2019.
    Cost of operations per ton of $53.20 compared to $44.97 for the second quarter of 2018, an increase of 18.3%. The increase was primarily the result of increases in cost of operations as discussed above.

Total coal revenues increased approximately 20.0% primarily due to higher contracted prices for tons sold across all segments during the second quarter of 2019. We also experienced an increase in demand for higher priced met tons from our Central Appalachia operations during the second quarter of 2019. Total cost of operations increased by 20.5% during the second quarter of 2019 primarily due to the increases in operating costs as discussed above.

Results for the six months ended June 30, 2019 included:

    Adjusted EBITDA of $8.2 million and net loss of $7.2 million compared to Adjusted EBITDA of $9.0 million and net loss of $5.9 million in the second quarter of 2018. Adjusted EBITDA decreased period over period primarily due to the increase in net loss resulting from an increase in operating costs at several of the operations for labor, contract services and equipment maintenance during the first six months of 2019 compared to the same period in 2018.
    Basic and diluted net loss per common unit of $0.54 compared to basic and diluted net loss per common unit of $0.45 for the second quarter of 2018.
    Coal sales were 2.2 million tons, which was an increase of 1.2% compared to the second quarter of 2018.
    Total revenues and coal revenues of $124.3 million and $122.9 million, respectively, compared to $109.7 million and $108.5 million, respectively, for the same period of 2018.
    Coal revenues per ton of $55.88 compared to $49.88 for the six months ended June 30, 2018, an increase of 12.0% as we experienced an increase in contracted sale prices across all segments during the first six months of 2019.
    Cost of operations of $114.4 million compared to $99.3 million for the same period of 2018 due to the increase in costs at several of the operations as discussed above.
    Cost of operations per ton of $51.99 compared to $45.62 for the six months ended June 30, 2018, an increase of 14.0%. The increase was primarily the result of increases in cost of operations as discussed above.

Total coal revenues and coal revenues per ton increased year-over-year by approximately 13.3% and 12.0%, respectively, due to an increase in contracted sale prices across all segments during the first six months of 2019. Total cost of operations increased by 15.3% and the cost of production per ton increased by 14.0% during the first six months of 2019. Both increases were primarily due to an increase in costs such as labor, contract services and equipment maintenance at several segments during the six months ended June 30, 2019.