Good day, ladies and gentlemen, and welcome to the Second Quarter 2012 Alliance Resource Partners, L.P. and Alliance Holdings GP Earnings Conference Call. My name is Erica, and I'll be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Mr. Brian Cantrell, Senior Vice President and Chief Financial Officer. Please proceed.

Thank you, Erica and welcome, everyone. Earlier this morning, we released 2012 second quarter earnings for both Alliance Resource Partners, or ARLP, and Alliance Holdings GP, or AHGP, and we'll now discuss those results, as well as our outlook for the remainder of this year. Following our prepared remarks, we'll open the call to your questions. Before beginning, we'll start with a few customary reminders. First, since AHGP's only assets are its ownership interest in ARLP, our comments for today will be directed to ARLP's results and outlook, unless otherwise noted. In addition, please be aware 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 from the partnerships. While these forward-looking statements are based on information currently available to the partnerships and those of their general partners and management, if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect, actual results for the partnerships may vary materially from those we projected or expected. In providing these remarks, neither ARLP nor AHGP, 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'll 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 measure 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're through with the required preliminaries, I'll start this morning with a review of the partnerships' operating and financial results…

Thank you, Brian, and good morning, everyone. It's no secret that times have been and are still tough in the coal sector. The markets are weak and the challenges are many. We can't forget however, that our industry is still expected to mine 1 billion tons in 2012 and even more in 2013. The world continues to rely on coal today, and coal will continue to be the fuel of choice for most of the electricity produced around the globe. And we believe demand for U.S. coal has hit bottom and supply and demand is closer to being in balance and better times are ahead. The question remains, just when? With a ton of misery for many in our industry, I feel fortunate that our partnerships have been able to manage through this recent downturn and still be able to deliver record results. As Brian just reviewed, during the 2012 quarter, ARLP posted record EBITDA, sales volumes and revenue. We also significantly improved our liquidity with our new bank facilities. Operationally, we continue to effectively execute ARLP's growth plans. We completed the acquisition of assets from Green River Collieries in April, adding the Onton No. 9 mine in approximately 40 million tons of reserves to our Illinois Basin portfolio. Onton performed as expected in the 2012 quarter, and we believe their addition will further enhance our already strong Illinois Basin market position. We also began longwall operations at Tunnel Ridge in mid-May, increasing production from this mine to nearly 300,000 tons in this 2012 quarter. As we work through the typical startup issues of the new coal mine, we currently expect production from Tunnel Ridge to reach 900,000 tons in the third quarter and 1.2 million tons in the fourth quarter of this year. In 2013, as we continue to…

[Operator Instructions] Our first question comes from the line of Praveen Narra [ph] with Raymond James.

You guys have actually been able to book some coal for the out week. You're thus far speaking to your strong relationships and operational reliability, could you give us an idea of what prices were coming in at? Is it comparable to old contracts? Are these higher or lower? Basically, how should we think about coal pricing going forward?

It's mixed, obviously, but I think as we look at this moment in time, as we look into 2013, we would be expecting revenues on a per ton basis comparable to what we see in 2012.

Okay, that's great. And then, I guess, just in thinking about the drought with your proximity to the rivers, could you give us a bit of color on how it is getting the coal out to the market, and I guess, what percentage of your coal is delivered on the river? We're thinking about 15% to 20%, is that about right.

We have, essentially, River View and Onton are on the river, as well as Tunnel Ridge. But I think the river issues are [indiscernible] more for West Kentucky operations. We are watching that. We haven't had any disruptions yet, but we are keeping an eye on that.

Okay, okay. And then I guess you guys have had a couple of regulatory issues at the 2 mines, are these back up and running, and are there any foreseeable issues on the horizon?

Well, in Central Appalachian operations, we had to idle 2 units. So we are -- we basically modified our work schedule to work 7 days a week on a 6, 3 work schedule to try to maximize efficiency and cost, but we're having to sort of focus on essentially 3 units at each mine as opposed to what we would prefer as 4 units at each mine. And that's been our biggest challenge. We've continued to have as much help as we want from the government, so I can't say that we'll always through those things.

Right, right. And I guess last question for me. Regarding the guidance on incoming EBITDA where the range was unchanged, you guys are a little bit lower, but the income -- the volumes and revenue which was a little bit lower there, but the income and EBITDA were in line, should we see this as a reflection of better than previously expected costs?

Yes. As Brian mentioned, with Tunnel Ridge ramping up, we should see our Northern App cost, I think we're projecting about 30% decrease at the first half, I believe.

That's right.

So you're going to see, we would -- depending on the -- if Tunnel Ridge hits their tonnage projections, then we should see improved costs, primarily driven by Tunnel Ridge's production.

[Operator Instructions] Our next question comes from the line of Garrett Nelson with BB&T Capital Markets. Garrett S. Nelson - BB&T Capital Markets, Research Division: I've got to say it's really pretty remarkable how you guys continue to execute quarter-after-quarter under these market conditions, so congratulations on that. I was just wondering if you could talk about changes in market demand that you've seen for your Illinois Basin coal in recent quarters. I know you mentioned exports, but are you seeing more of your Illinois Basin coal traveling to the Southeast or being used as a blend. Are you seeing an increase in demand from any specific regional markets over the last few quarters?

Not really. I think that we feel like for 2013, 2014 we will. We think that with the Central Appalachia production falling and gas prices expected to rise, we do expect that we will see increased demand for the reasons you just mentioned. But looking back, we haven't actually seen any movement in that regard. Garrett S. Nelson - BB&T Capital Markets, Research Division: Okay. And then I was hoping you might be able to provide some insight into productivity metrics at your Illinois Basin mines, not just the sales and cash cost numbers that we can see, but maybe tons per man hour trends or some of the steps you've taken to maximize efficiency from those mines.

Essentially, we've had issues at Dotiki where we're transitioning from the 19 to the 13. So we have had some production loss there and productivity issues. We do anticipate -- we feel that the 13 seems to be very favorable once we can get there. So we do expect improved productivity out of Dotiki as we look forward. Beyond that, I think our operations are running pretty consistently. And the only issue that will affect productivity, either plus or minus, is conditions. So sometimes conditions are good, we get higher productivity. And sometimes, we find some not totally challenging, but just some route conditions or whatever that might impact production in a negative way. But overall, the Illinois Basin seems pretty consistent and our mines do have pretty consistent, reliable tons per man hour across-the-board, conditions and regulatory impacts being the exception.

[Operator Instructions] Our next question comes from the line of Chris Haberlin [ph] from Davenport & Company.

I was hoping that maybe you could kind of give us a little bit of color around your customers' inventory positions, just given the recent heat, are you starting to see inventories come down? And then kind of as a follow-on, how do you see different inventories by different basins position? What basins are best positioned, and what basins kind of have the most inventory?

I think the answer to your first question, the burn, obviously, has improved. So I'm prayed for a rain dance as of the last quarter, not a rain dance but a heat dance, and I think it worked. But -- so the burn has been up for our customers, and thus, they have been able to reduce inventories. I think overall inventories are still high, at a higher level, so we don't see a lot of new activity in the marketplace. So I think we would expect that the cause of the supply side -- that the demand-supply balance will be more in balance hopefully by the end of the year. Because it needs to be a little bit more supply to come off the market in Central App, which I think will happen. I think that Central App has been the highest, and then you've got Powder River basin, are the 2 highest. I think Northern App and Illinois Basin are better positioned, but even their inventories are higher than normal. I think that's the current situation. I think the real issue that I think that creates uncertainty is what's going to happen in Europe with the debt issue there and the euro, and then what's going to happen in our own country as we have this election season, and we're playing around with whether we're going to have this fiscal cliff occur or not, with the tax increases and the sequester, which will definitely impact GDP. So some people believe that everything will get delayed a year, and whoever wins the presidency will deal with it next year without any major impact. And others believe that politicians will go off the cliff here and create all kinds of consternation, so that's the one area of concern as to what the economy is going to be that would impact what the inventories would be. And until I think we get clarity, you're not going to see utilities go out and start committing tonnage. And then obviously, there's the natural gas prices, as to whether you're going to see $4 gas in the fourth quarter this year or $4 gas sometime next year or the following year.

On pricing, just given the significant supply cuts across the industry, would you anticipate seeing pricing start to return due to the supply cuts, or would you need to see demand really come back and inventories get back down to maybe more normal levels before pricing would start to return?

I think the biggest catalyst of price increase would be natural gas prices and the return back to coal. I think absent that, if demand is stable, then I think pricing will remain to be stable. So I think that's going to be the key as to how fast utilities that moved away from coal over the last 18 months would move back into coal, if you start to see gas prices moving up.

And on that, given the recent rebound in natural gas prices, are you starting to see any switching back to coal, specifically, in the Illinois Basin?

We haven't lost that much in Illinois Basin. So I think the first switchback will be at the Powder River basin, and then I think the second will be as those plants that moved away from Central App and they're going to come back for Illinois Basin. So I think that's where we're going to get the improved market condition, is when -- and again, there are certain utilities today at $3.50 gas that are definitely looking to burn Illinois Basin coal. So whether they switched or they didn't switch or whether that demand, it's a hard question to answer, as to whether it's replacement for Central App or if it's gas prices, but we are projecting that Illinois Basin will grow anywhere from 10 million tons to 20 million tons over the next 12 to 18 months.

Our next question comes from the line of Wayne Atwell with Global Hunter.

This is sort of an industry question, do you have how much -- do you have any idea on how much capacity is going to be closed permanently over the next 6 to 12 months?

I think our projections go to 2015, so I don't know over the 6 to 12 month period. And I think we are at, what was it, 37 [indiscernible]?

About [ph], really, yes.

I can't give you a precise number. I can't remember right off the top of my head, but it's in our last presentation. And hopefully, it's still on our website as to what our particular guidance is. If it's not, you can call Brian, and he can give you the exact number.

We don't have it at our fingertips right now.

I read so many different projections on that, I'm afraid to say which one is ours versus other peoples.

We have no further questions at this time. I will now turn the call back over to Brian Cantrell for any closing remarks.

Thanks, Erica. Well it looks like our results to a large part are speaking for themselves. We want to thank all of you for joining us today to learn more about our record results this quarter and what should prove to be another year of impressive results for our partnerships. As always, we appreciate your continued support and interest in both ARLP and AHGP, and we look forward to updating you on our progress in October. Thank you, all.

Thank you for your participation in today's conference. This concludes the presentation. Everyone may now disconnect, and have a great day.