Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported
substantial increases to financial and operating results for the
quarter ended September 30, 2022 (the "2022 Quarter") compared to
the quarter ended September 30, 2021 (the "2021 Quarter"). Total
revenues in the 2022 Quarter increased 51.3% to a record $628.4
million compared to $415.4 million for the 2021 Quarter as a result
of significantly higher coal sales revenues, which rose $188.3
million to $550.6 million, and oil & gas royalties revenues,
which jumped 75.6% to $35.3 million. Coal sales revenues increased
on the strength of record coal sales prices, which rose 40.5% in
the 2022 Quarter to $59.94 per ton sold, and increased coal sales
volumes, which were 8.1% higher compared to the 2021 Quarter. Oil
& gas royalties revenue in the 2022 Quarter benefited from
significantly higher volumes and sales price realizations per BOE,
which increased 33.1% and 31.6%, respectively, compared to the 2021
Quarter. Total operating expenses increased to $450.3 million in
the 2022 Quarter, compared to $348.7 million in the 2021 Quarter,
due primarily to increased coal sales volumes and ongoing
inflationary cost pressures. Net income for the 2022 Quarter
increased 186.0% to $164.6 million, or $1.25 per basic and diluted
limited partner unit, compared to $57.5 million, or $0.44 per basic
and diluted limited partner unit, for the 2021 Quarter. EBITDA also
increased 84.0% in the 2022 Quarter to $250.2 million compared to
$135.9 million in the 2021 Quarter. (Unless otherwise noted, all
references in the text of this release to "net income" refer to
"net income attributable to ARLP." For a definition of EBITDA and
related reconciliation to its comparable GAAP financial measure
throughout this release, please see the end of this release.)
Performance in the 2022 Quarter also improved compared to the
quarter ended June 30, 2022 (the "Sequential Quarter") as modest
increases to coal sales volumes and pricing pushed both coal sales
and total revenues higher by 3.5% and 1.9%, respectively. Increased
revenues, partially offset by higher total operating expenses in
the 2022 Quarter, led net income and EBITDA higher by 1.9% and
2.6%, respectively, both as compared to the Sequential Quarter.
Total revenues increased 55.6% to $1.71 billion for the nine
months ended September 30, 2022 (the "2022 Period"), compared to
$1.10 billion for the nine months ended September 30, 2021 (the
"2021 Period"), primarily due to substantial increases in prices
and volumes from both coal and oil & gas royalties. Higher
revenues, partially offset by increased total operating and income
tax expenses, led to significantly higher net income, which rose
187.1% to $362.7 million for the 2022 Period, or $2.76 per basic
and diluted limited partner unit, compared to $126.3 million, or
$0.97 per basic and diluted limited partner unit, for the 2021
Period. EBITDA increased 85.3% in the 2022 Period to $646.3 million
compared to $348.9 million in the 2021 Period.
As previously announced on October 28, 2022, the Board of
Directors of ARLP’s general partner (the "Board") increased the
cash distribution to unitholders for the 2022 Quarter to $0.50 per
unit (an annualized rate of $2.00 per unit), payable on November
14, 2022, to all unitholders of record as of the close of trading
on November 7, 2022. The announced distribution represents a 150.0%
increase over the cash distribution of $0.20 per unit for the 2021
Quarter and a 25.0% increase over the cash distribution of $0.40
per unit for the Sequential Quarter.
"With energy market fundamentals remaining favorable during the
2022 Quarter, ARLP again delivered strong financial and operating
performance, as we posted record quarterly total revenues and
income from operations as well as significant increases to net
income and EBITDA compared to the 2021 Quarter," said Joseph W.
Craft III, Chairman, President and Chief Executive Officer. "Higher
coal sales and production volumes combined with record per ton
price realizations drove our total Coal Segment Adjusted EBITDA up
77.8% to $224.6 million as margins per ton sold jumped $9.58
compared to the 2021 Quarter. Strong energy markets also continued
to benefit our royalty businesses as increased volumes and
commodity price realizations led to increased total royalty revenue
and record Segment Adjusted EBITDA during the 2022 Quarter."
Mr. Craft added, "ARLP was also able to execute new coal sales
commitments for delivery of 5.6 million tons through 2025 at prices
supporting higher margins in the future. With ARLP sold out for
this year and solid contracted coal sales volumes in 2023 and 2024,
we have good visibility into our ability to generate cash flow
growth over the next several years. Reflecting our strong
year-to-date performance and future expectations, ARLP’s Board
elected to accelerate our previously planned increases to cash
distributions to unitholders by declaring a $0.50 per unit
distribution for the 2022 Quarter, as communicated last week."
Operating Results and Analysis
% Change
2022 Third
2021 Third
Quarter /
2022 Second
% Change
(in millions, except per ton and per
BOE data)
Quarter
Quarter
Quarter
Quarter
Sequential
Coal Operations
(1)
Illinois
Basin
Tons sold
6.109
5.750
6.2
%
5.831
4.8
%
Coal sales price per ton sold
$
51.44
$
37.85
35.9
%
$
49.80
3.3
%
Segment Adjusted EBITDA Expense per
ton
$
31.91
$
26.03
22.6
%
$
33.39
(4.4
)%
Segment Adjusted EBITDA
$
120.8
$
69.3
74.2
%
$
97.4
24.0
%
Appalachia
Tons sold
3.076
2.744
12.1
%
3.102
(0.8
)%
Coal sales price per ton sold
$
76.82
$
52.71
45.7
%
$
77.83
(1.3
)%
Segment Adjusted EBITDA Expense per
ton
$
43.78
$
33.64
30.1
%
$
37.84
15.7
%
Segment Adjusted EBITDA
$
102.0
$
52.7
93.5
%
$
124.4
(18.0
)%
Total Coal
Operations
Tons sold
9.185
8.494
8.1
%
8.933
2.8
%
Coal sales price per ton sold
$
59.94
$
42.65
40.5
%
$
59.53
0.7
%
Segment Adjusted EBITDA Expense per
ton
$
36.77
$
28.95
27.0
%
$
36.04
2.0
%
Segment Adjusted EBITDA
$
224.6
$
126.3
77.8
%
$
222.6
0.9
%
Royalties
(1)
Oil & Gas
Royalties
BOE sold (2)
0.551
0.414
33.1
%
0.499
10.4
%
Oil percentage of BOE
43.8
%
51.2
%
(14.5
)%
43.2
%
1.4
%
Average sales price per BOE (3)
$
64.03
$
48.64
31.6
%
$
72.03
(11.1
)%
Segment Adjusted EBITDA Expense
$
3.5
$
2.6
33.8
%
$
3.2
9.2
%
Segment Adjusted EBITDA
$
35.8
$
19.1
87.5
%
$
34.6
3.4
%
Coal
Royalties
Royalty tons sold
5.654
5.344
5.8
%
5.268
7.3
%
Revenue per royalty ton sold
$
2.96
$
2.52
17.5
%
$
2.76
7.2
%
Segment Adjusted EBITDA Expense
$
5.5
$
4.3
30.2
%
$
5.4
2.7
%
Segment Adjusted EBITDA
$
11.2
$
9.2
21.4
%
$
9.1
22.3
%
Total
Royalties
Total royalty revenues
$
54.3
$
34.6
56.7
%
$
51.1
6.2
%
Segment Adjusted EBITDA Expense
$
9.1
$
6.9
31.6
%
$
8.6
5.1
%
Segment Adjusted EBITDA
$
46.9
$
28.3
66.0
%
$
43.7
7.3
%
Consolidated
Total (4)
Total revenues
$
628.4
$
415.4
51.3
%
$
616.5
1.9
%
Segment Adjusted EBITDA Expense
$
330.1
$
239.4
37.9
%
$
316.1
4.4
%
Segment Adjusted EBITDA
$
271.5
$
154.6
75.6
%
$
266.3
2.0
%
______________________
(1)
For definitions of Segment Adjusted EBITDA
Expense and Segment Adjusted EBITDA and related reconciliations to
comparable GAAP financial measures, please see the end of this
release. Segment Adjusted EBITDA Expense per ton is defined as
Segment Adjusted EBITDA Expense – Coal Operations (as reflected in
the reconciliation table at the end of this release) divided by
total tons sold.
(2)
Barrels of oil equivalent (“BOE”) for
natural gas volumes is calculated on a 6:1 basis (6,000 cubic feet
of natural gas to one barrel).
(3)
Average sales price per BOE is defined as
oil & gas royalty revenues excluding lease bonus revenue
divided by total BOE sold.
(4)
Reflects total consolidated results, which
include our other and corporate activities and eliminations in
addition to the Illinois Basin, Appalachia, Oil & Gas Royalties
and Coal Royalties reportable segments highlighted above.
ARLP’s coal sales prices per ton increased significantly in both
the Illinois Basin and Appalachia compared to the 2021 Quarter as
improved price realizations in both the domestic and export markets
drove coal sales prices higher by 35.9% and 45.7% in the Illinois
Basin and Appalachia, respectively. Compared to the Sequential
Quarter, coal sales price realizations improved as well. Increased
domestic sales volumes drove coal sales volumes higher by 6.2% and
12.1% in the Illinois Basin and Appalachia, respectively, compared
to the 2021 Quarter. Compared to the Sequential Quarter, Illinois
Basin coal sales volumes increased 4.8% as a result of higher sales
volumes at our Gibson South and Hamilton mines while coal sales
volumes in Appalachia remained relatively consistent. ARLP ended
the 2022 Quarter with total coal inventory of 1.4 million tons,
representing an increase of 0.4 million tons compared to the end of
the 2021 Quarter and a decrease of 0.2 million tons compared to the
end of the Sequential Quarter.
Segment Adjusted EBITDA Expense per ton increased by 22.6% and
30.1% in the Illinois Basin and Appalachia, respectively, compared
to the 2021 Quarter primarily as a result of ongoing inflationary
pressures on numerous expense items, most notably labor-related
expenses, supply and maintenance costs as well as increased
sales-related expenses due to higher price realizations. Longwall
moves at our Hamilton and Tunnel Ridge mines during the 2022
Quarter also contributed to higher per ton expenses compared to the
2021 Quarter. Compared to the Sequential Quarter, Segment Adjusted
EBITDA Expense per ton in the Illinois Basin decreased 4.4% in the
2022 Quarter due to increased sales volumes, lower roof support
expenses, higher recoveries at our Gibson South and Hamilton mines
and a $6.5 million non-cash contingent accrual recorded in the
Sequential Quarter related to our 2015 purchase of the Hamilton
mine. These decreases were partially offset by an extended longwall
move at our Hamilton mine during the 2022 Quarter. In Appalachia,
Segment Adjusted EBITDA Expense per ton increased 15.7% compared to
the Sequential Quarter as a result of adverse mining conditions and
preparation plant maintenance improvements at MC Mining, higher
labor-related expenses and supply costs as well as a longwall move
at our Tunnel Ridge mine in the 2022 Quarter. These increases were
partially offset by lower sales-related expenses due to decreased
price realizations and increased recoveries at our Mettiki and
Tunnel Ridge mines.
Our Oil & Gas Royalties segment had significantly higher
volumes and sales price realizations per BOE in the 2022 Quarter
which drove Segment Adjusted EBITDA higher by 87.5% to a record
$35.8 million compared to $19.1 million for the 2021 Quarter.
Compared to the Sequential Quarter, Segment Adjusted EBITDA
increased by 3.4% in the 2022 Quarter primarily due to higher oil
& gas volumes, which rose by 10.4%, partially offset by lower
price realizations, which decreased by 11.1%.
Segment Adjusted EBITDA for our Coal Royalties segment increased
to $11.2 million, representing increases of 21.4% and 22.3%
compared the 2021 and Sequential Quarters, respectively, as a
result of increased royalty tons sold and higher average royalty
rates per ton.
Outlook
"Assisted by the supply driven energy crisis the world has
experienced this year, ARLP is on track to achieve record financial
results in 2022," said Mr. Craft. "Since we have not seen a
meaningful supply response, we expect the global energy markets
will continue to be favorable for the foreseeable future. Based
upon this view and our current contracted coal sales volumes, we
expect to add up to two million tons of Illinois basin production
next year giving us confidence our Partnership’s 2023 financial
results will grow beyond this year’s record performance. In the
near term, inflation pressures and continuing transportation
challenges are the most significant issues our coal operations and
marketing teams are managing. Rail performance has recently
improved but low water levels and lock outages have impacted both
exports destined for the U.S. Gulf and domestic barge traffic.
These potential shipping delays may lead us to defer some of this
year’s contracted tons into early next year. We have therefore
adjusted our expectations for 2022 coal sales volumes, prices and
costs as noted in the updated guidance table below. Our oil &
gas royalties segment continues to benefit from increased drilling
and completion activity by operators on our acreage and we have
adjusted volume expectations accordingly."
Mr. Craft continued, "Since our last earnings call in July, ARLP
continued to invest for future growth. In keeping with our
objective of reinvesting cash flows generated by our oil & gas
royalty segment, we recently closed two transactions totaling $94.5
million to acquire an additional 4,322 net oil & gas royalty
acres in the Permian Basin. There are currently 1,200 producing
wells, 101 wells to be completed and 98 permitted locations on the
acquired acreage, providing ARLP with line of sight to future oil
& gas production growth. To enhance our long-lived, efficient
mining operations and to maximize cash flow from our existing coal
assets, we recently committed to access a resource area containing
approximately 110 million tons adjacent to our River View mine
allowing us to produce from a more productive, higher yield coal
seam area and capture the opportunity to fully utilize existing
infrastructure at this operation. In addition, during the 2022
Quarter, we added 69 million tons of lower cost, lower sulfur coal
adjacent to our low-cost Tunnel Ridge longwall mine. We expect both
of these investments will payout on cost savings alone and also
give us the opportunity to add tons beyond 2024 to meet market
demand, if available. Finally, ARLP recently elected to hold its
commitment to Francis Energy at its initial $20 million convertible
note investment. We remain interested in the EV infrastructure
market and continue to evaluate opportunities in the industry to
create value potential for ARLP."
Mr. Craft concluded, "These are exciting times for ARLP. We
believe our current core businesses are well positioned to deliver
significant cash flows for some time to come, allowing ARLP to
provide attractive cash returns to unitholders, effectively manage
our balance sheet and invest in new opportunities to create
long-term value for all of our stakeholders."
ARLP’s updated full year 2022 guidance is outlined below:
2022 Full Year
Guidance
Coal
Operations
Volumes (Million
Short Tons)
Illinois Basin Sales Tons
24.4 — 24.6
Appalachia Sales Tons
11.1 — 11.3
Total Sales Tons
35.5 — 35.9
Committed & Priced Sales Tons
2022 — Domestic/Export/Total
31.6/4.3/35.9
2023 — Domestic/Export/Total
30.1/2.8/32.9
2024 — Domestic/Export/Total
21.8/1.0/22.8
Per Ton
Estimates
Coal Sales Price per ton sold (1)
$57.50 — $59.00
Segment Adjusted EBITDA Expense per ton
sold (2)
$35.75 — $36.25
Royalties
Oil & Gas
Royalties
Oil (000 Barrels)
975 — 1,015
Natural gas (000 MCF)
4,250 — 4,400
Liquids (000 Barrels)
480 — 500
Segment Adjusted EBITDA Expense (% of Oil
& Gas Royalties Revenue)
~ 10.0%
Coal
Royalties
Royalty tons sold (Million Short Tons)
21.5 — 21.8
Revenue per royalty ton sold
$2.85 — $2.95
Segment Adjusted EBITDA Expense per
royalty ton sold
$0.95 — $1.05
Consolidated (Millions)
Depreciation, depletion and
amortization
$265 — $275
General and administrative
$82 — $84
Net interest expense
$36 — $37
Income tax expense
$61 — $62
Capital expenditures
$300 — $325
______________________
(1)
Sales price per ton is defined as total
coal sales revenue divided by total tons sold.
(2)
Segment Adjusted EBITDA Expense is defined
as operating expenses, coal purchases and other expenses
A conference call regarding ARLP's 2022 Quarter financial
results is scheduled for today at 10:00 a.m. Eastern. To
participate in the conference call, dial (877) 407-0784 and request
to be connected to the Alliance Resource Partners, L.P. earnings
conference call. International callers should dial (201) 689-8560
and request to be connected to the same call. Investors may also
listen to the call via the "investor relations" section of ARLP’s
website at http://www.arlp.com.
An audio replay of the conference call will be available for
approximately one week. To access the audio replay, dial U.S. Toll
Free (844) 512-2921; International Toll (412) 317-6671 and request
to be connected to replay using access code 13733069.
About Alliance Resource Partners, L.P.
ARLP is a diversified energy company that is currently the
largest coal producer in the eastern United States. ARLP also
generates operating and royalty income from mineral interests it
owns in strategic coal and oil & gas producing regions in the
United States. In addition, ARLP is positioning itself as an energy
provider for the future by leveraging its core technology and
operating competencies to make strategic investments in the
fast-growing energy and infrastructure transition.
News, unit prices and additional information about ARLP,
including filings with the Securities and Exchange Commission
("SEC"), are available at http://www.arlp.com. For more
information, contact the investor relations department of ARLP at
(918) 295-7674 or via e-mail at investorrelations@arlp.com.
The statements and projections used throughout this release are
based on current expectations. These statements and projections are
forward-looking, and actual results may differ materially. These
projections do not include the potential impact of any mergers,
acquisitions or other business combinations that may occur after
the date of this release. We have included more information below
regarding business risks that could affect our results.
FORWARD-LOOKING STATEMENTS: With the exception of historical
matters, any matters discussed in this press release are
forward-looking statements that involve risks and uncertainties
that could cause actual results to differ materially from projected
results. Those forward-looking statements include expectations with
respect to our future financial performance, coal and oil & gas
consumption and expected future prices, our ability to increase
unitholder distributions in future quarters, business plans and
potential growth with respect to our energy and infrastructure
transition investments, optimizing cash flows, reducing operating
and capital expenditures, preserving liquidity and maintaining
financial flexibility, among others. These risks to our ability to
achieve these outcomes include, but are not limited to, the
following: the outcome or escalation of current hostilities in
Ukraine, the severity, magnitude, and duration of the COVID-19
pandemic and the emergence of new virus variants, including impacts
of the pandemic and of businesses' and governments' responses to
the pandemic, including actions to mitigate its impact and the
development of treatments and vaccines, on our operations and
personnel, and on demand for coal, oil, and natural gas, the
financial condition of our customers and suppliers, available
liquidity and capital sources and broader economic disruptions;
changes in macroeconomic and market conditions and market
volatility arising from hostilities in Ukraine, including
inflation, changes in coal, oil, natural gas, and natural gas
liquids prices, and the impact of such changes and volatility on
our financial position; decline in the coal industry's share of
electricity generation, including as a result of environmental
concerns related to coal mining and combustion and the cost and
perceived benefits of other sources of electricity and fuels, such
as oil & gas, nuclear energy, and renewable fuels; changes in
global economic and geo-political conditions or in industries in
which we or our customers operate; changes in coal prices and/or
oil & gas prices, demand and availability which could affect
our operating results and cash flows; actions of the major
oil-producing countries with respect to oil production volumes and
prices could have direct and indirect impacts over the near and
long term on oil & gas exploration and production operations at
the properties in which we hold mineral interests; changes in
competition in domestic and international coal markets and our
ability to respond to such changes; potential shut-ins of
production by operators of the properties in which we hold mineral
interests due to low oil, natural gas, and natural gas liquid
prices or the lack of downstream demand or storage capacity; risks
associated with the expansion of our operations and properties; our
ability to identify and complete acquisitions; our ability to
identify and invest in new energy and infrastructure transition
ventures; the success of our development plans for our wholly owned
subsidiary, Matrix Design Group, LLC, and our investments in
emerging infrastructure and technology companies; dependence on
significant customer contracts, including renewing existing
contracts upon expiration; adjustments made in price, volume, or
terms to existing coal supply agreements; the effects of and
changes in trade, monetary and fiscal policies and laws, including
the interest rate policies of the Federal Reserve Board; the
effects of and changes in taxes or tariffs and other trade measures
adopted by the United States and foreign governments; legislation,
regulations, and court decisions and interpretations thereof, both
domestic and foreign, including those relating to the environment
and the release of greenhouse gases, mining, miner health and
safety, hydraulic fracturing, and health care; deregulation of the
electric utility industry or the effects of any adverse change in
the coal industry, electric utility industry, or general economic
conditions; investors' and other stakeholders' increasing attention
to environmental, social and governance matters; liquidity
constraints, including those resulting from any future
unavailability of financing; customer bankruptcies, cancellations
or breaches to existing contracts, or other failures to perform;
customer delays, failure to take coal under contracts or defaults
in making payments; our productivity levels and margins earned on
our coal sales; disruptions to oil & gas exploration and
production operations at the properties in which we hold mineral
interests; changes in equipment, raw material, service or labor
costs or availability, including due to inflationary pressures;
changes in our ability to recruit, hire and maintain labor,
including as a result of the potential impact of government-imposed
vaccine mandates; our ability to maintain satisfactory relations
with our employees; increases in labor costs including costs of
health insurance and taxes resulting from the Affordable Care Act,
adverse changes in work rules, or cash payments or projections
associated with workers' compensation claims; increases in
transportation costs and risk of transportation delays or
interruptions; operational interruptions due to geologic,
permitting, labor, weather, supply chain shortages of equipment or
mine supplies, or other factors; risks associated with major
mine-related accidents, mine fires, mine floods or other
interruptions; results of litigation, including claims not yet
asserted; foreign currency fluctuations that could adversely affect
the competitiveness of our coal abroad; difficulty maintaining our
surety bonds for mine reclamation as well as workers' compensation
and black lung benefits; difficulty in making accurate assumptions
and projections regarding post-mine reclamation as well as pension,
black lung benefits, and other post-retirement benefit liabilities;
uncertainties in estimating and replacing our coal mineral reserves
and resources; uncertainties in estimating and replacing our oil
& gas reserves; uncertainties in the amount of oil & gas
production due to the level of drilling and completion activity by
the operators of our oil & gas properties; uncertainties in the
future of the electric vehicle industry and the market for EV
charging stations; the impact of current and potential changes to
federal or state tax rules and regulations, including a loss or
reduction of benefits from certain tax deductions and credits;
difficulty obtaining commercial property insurance, and risks
associated with our participation in the commercial insurance
property program; evolving cybersecurity risks, such as those
involving unauthorized access, denial-of-service attacks, malicious
software, data privacy breaches by employees, insiders or others
with authorized access, cyber or phishing-attacks, ransomware,
malware, social engineering, physical breaches, or other actions;
and difficulty in making accurate assumptions and projections
regarding future revenues and costs associated with equity
investments in companies we do not control.
Additional information concerning these and other factors can
be found in ARLP's public periodic filings with the SEC, including
ARLP's Annual Report on Form 10-K for the year ended December 31,
2021, filed on February 25, 2022 and amended on August 26, 2022,
and ARLP's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2022 and June 30, 2022, filed on May 9, 2022 and August
8, 2022, respectively. Except as required by applicable securities
laws, ARLP does not intend to update its forward-looking
statements.
ALLIANCE RESOURCE PARTNERS,
L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME AND OPERATING DATA
(In thousands, except unit and
per unit data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Tons Sold
9,185
8,494
26,280
23,168
Tons Produced
8,988
7,986
27,044
23,468
Mineral Interest Volumes (BOE)
551
414
1,555
1,205
SALES AND OPERATING REVENUES:
Coal sales
$
550,563
$
362,264
$
1,470,730
$
975,725
Oil & gas royalties
35,312
20,109
102,166
51,222
Transportation revenues
28,548
22,027
93,305
45,153
Other revenues
13,997
11,039
39,583
24,404
Total revenues
628,420
415,439
1,705,784
1,096,504
EXPENSES:
Operating expenses (excluding
depreciation, depletion and amortization)
330,298
233,201
908,546
642,760
Transportation expenses
28,548
22,027
93,305
45,153
Outside coal purchases
—
6,065
151
6,179
General and administrative
21,341
18,655
62,394
51,651
Depreciation, depletion and
amortization
70,143
68,763
200,191
192,698
Total operating expenses
450,330
348,711
1,264,587
938,441
INCOME FROM OPERATIONS
178,090
66,728
441,197
158,063
Interest expense, net
(9,245
)
(9,408
)
(28,304
)
(29,646
)
Interest income
426
19
554
51
Equity method investment income
2,108
703
4,576
1,106
Other income (expense)
192
(84
)
1,337
(2,632
)
INCOME BEFORE INCOME TAXES
171,571
57,958
419,360
126,942
INCOME TAX EXPENSE
6,600
234
55,646
227
NET INCOME
164,971
57,724
363,714
126,715
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST
(364
)
(176
)
(977
)
(384
)
NET INCOME ATTRIBUTABLE TO ARLP
$
164,607
$
57,548
$
362,737
$
126,331
EARNINGS PER LIMITED PARTNER UNIT -
BASIC AND DILUTED
$
1.25
$
0.44
$
2.76
$
0.97
WEIGHTED-AVERAGE NUMBER OF UNITS
OUTSTANDING – BASIC AND DILUTED
127,195,219
127,195,219
127,195,219
127,195,219
ALLIANCE RESOURCE PARTNERS,
L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except unit
data)
(Unaudited)
September 30,
December 31,
2022
2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
278,471
$
122,403
Trade receivables
190,435
129,531
Other receivables
6,873
680
Inventories, net
98,765
60,302
Advance royalties
3,458
4,958
Prepaid expenses and other assets
14,733
21,354
Total current assets
592,735
339,228
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost
3,765,400
3,608,347
Less accumulated depreciation, depletion
and amortization
(2,034,345
)
(1,909,669
)
Total property, plant and equipment,
net
1,731,055
1,698,678
OTHER ASSETS:
Advance royalties
70,181
63,524
Equity method investments
46,158
26,325
Equity securities
32,639
—
Goodwill
4,373
4,373
Operating lease right-of-use assets
15,395
14,158
Other long-term assets
11,845
13,120
Total other assets
180,591
121,500
TOTAL ASSETS
$
2,504,381
$
2,159,406
LIABILITIES AND PARTNERS'
CAPITAL
CURRENT LIABILITIES:
Accounts payable
$
97,032
$
69,586
Accrued taxes other than income taxes
25,133
17,787
Accrued payroll and related expenses
42,966
36,805
Accrued interest
12,500
5,000
Workers' compensation and pneumoconiosis
benefits
12,296
12,293
Current finance lease obligations
302
840
Current operating lease obligations
2,757
1,820
Other current liabilities
45,375
17,375
Current maturities, long-term debt,
net
15,133
16,071
Total current liabilities
253,494
177,577
LONG-TERM LIABILITIES:
Long-term debt, excluding current
maturities, net
409,944
418,942
Pneumoconiosis benefits
109,687
107,560
Accrued pension benefit
23,415
25,590
Workers' compensation
39,031
44,911
Asset retirement obligations
124,622
123,517
Long-term finance lease obligations
533
618
Long-term operating lease obligations
12,778
12,366
Deferred income tax liabilities
37,607
391
Other liabilities
25,450
21,865
Total long-term liabilities
783,067
755,760
Total liabilities
1,036,561
933,337
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
ARLP Partners' Capital:
Limited Partners - Common Unitholders
127,195,219 units outstanding
1,518,679
1,279,183
Accumulated other comprehensive loss
(61,843
)
(64,229
)
Total ARLP Partners' Capital
1,456,836
1,214,954
Noncontrolling interest
10,984
11,115
Total Partners' Capital
1,467,820
1,226,069
TOTAL LIABILITIES AND PARTNERS'
CAPITAL
$
2,504,381
$
2,159,406
ALLIANCE RESOURCE PARTNERS,
L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2022
2021
CASH FLOWS FROM OPERATING
ACTIVITIES
$
548,554
$
310,977
CASH FLOWS FROM INVESTING
ACTIVITIES:
Property, plant and equipment:
Capital expenditures
(221,286
)
(88,661
)
Increase in accounts payable and accrued
liabilities
39,500
2,281
Proceeds from sale of property, plant and
equipment
5,006
6,432
Contributions to equity method
investments
(20,220
)
—
Purchase of equity securities
(32,639
)
—
Distributions received from investments in
excess of cumulative earnings
387
1,088
Payment for acquisition of business
(11,391
)
—
Escrow deposit for oil & gas reserve
acquisitions
(4,150
)
(1,550
)
Other
(2,704
)
—
Net cash used in investing activities
(247,497
)
(80,410
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings under securitization
facility
27,500
35,000
Payments under securitization facility
(27,500
)
(90,900
)
Payments on equipment financings
(12,360
)
(12,888
)
Borrowings under revolving credit
facilities
—
15,000
Payments under revolving credit
facilities
—
(102,500
)
Borrowings from line of credit
—
3,230
Payments on finance lease obligations
(623
)
(568
)
Payment of debt issuance costs
—
(113
)
Payments for purchase of units and tax
withholdings related to settlements under deferred compensation
plans
—
(1,090
)
Distributions paid to Partners
(130,898
)
(26,086
)
Other
(1,108
)
(615
)
Net cash used in financing activities
(144,989
)
(181,530
)
NET CHANGE IN CASH AND CASH
EQUIVALENTS
156,068
49,037
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD
122,403
55,574
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
$
278,471
$
104,611
Reconciliation of GAAP "net income
attributable to ARLP" to non-GAAP "EBITDA" and "Distributable Cash
Flow" (in thousands).
EBITDA is defined as net income attributable to ARLP before net
interest expense, income taxes and depreciation, depletion and
amortization. Distributable cash flow ("DCF") is defined as EBITDA
excluding interest expense (before capitalized interest), interest
income, income taxes and estimated maintenance capital
expenditures. Distribution coverage ratio ("DCR") is defined as DCF
divided by distributions paid to partners.
Management believes that the presentation of such additional
financial measures provides useful information to investors
regarding our performance and results of operations because these
measures, when used in conjunction with related GAAP financial
measures, (i) provide additional information about our core
operating performance and ability to generate and distribute cash
flow, (ii) provide investors with the financial analytical
framework upon which management bases financial, operational,
compensation and planning decisions and (iii) present measurements
that investors, rating agencies and debt holders have indicated are
useful in assessing us and our results of operations.
EBITDA, DCF and DCR should not be considered as alternatives to
net income attributable to ARLP, net income, income from
operations, cash flows from operating activities or any other
measure of financial performance presented in accordance with GAAP.
EBITDA and DCF are not intended to represent cash flow and do not
represent the measure of cash available for distribution. Our
method of computing EBITDA, DCF and DCR may not be the same method
used to compute similar measures reported by other companies, or
EBITDA, DCF and DCR may be computed differently by us in different
contexts (i.e. public reporting versus computation under financing
agreements).
Three Months Ended
Nine Months Ended
Three Months Ended
September 30,
September 30,
June 30,
2022
2021
2022
2021
2022
Net income attributable to ARLP
$
164,607
$
57,548
$
362,737
$
126,331
$
161,478
Depreciation, depletion and
amortization
70,143
68,763
200,191
192,698
66,734
Interest expense, net
9,083
9,512
28,255
29,909
9,475
Capitalized interest
(264
)
(123
)
(505
)
(314
)
(171
)
Income tax expense
6,600
234
55,646
227
6,331
EBITDA
250,169
135,934
646,324
348,851
243,847
Interest expense, net
(9,083
)
(9,512
)
(28,255
)
(29,909
)
(9,475
)
Income tax expense
(6,600
)
(234
)
(55,646
)
(227
)
(6,331
)
Deferred income tax expense (benefit)
(1)
268
232
37,274
226
(288
)
Estimated maintenance capital expenditures
(2)
(50,872
)
(39,131
)
(153,069
)
(114,993
)
(50,250
)
Distributable Cash Flow
$
183,882
$
87,289
$
446,628
$
203,948
$
177,503
Distributions paid to partners
$
52,338
$
13,041
$
130,898
$
26,086
$
45,810
Distribution Coverage Ratio
3.51
6.69
3.41
7.82
3.87
______________________
(1)
Deferred income tax expense (benefit) is
the amount of income tax expense (benefit) during the period on
temporary differences between the tax basis and financial reporting
basis of recorded assets and liabilities. These differences
generally arise in one period and reverse in subsequent periods to
eventually offset each other and do not impact the amount of
distributable cash flow available to be paid to partners.
(2)
Maintenance capital expenditures are those
capital expenditures required to maintain, over the long-term, the
existing infrastructure of our coal assets. We estimate maintenance
capital expenditures on an annual basis based upon a five-year
planning horizon. For the 2022 planning horizon, average annual
estimated maintenance capital expenditures are assumed to be $5.66
per ton produced compared to an estimated $4.90 per ton produced in
2021. Our actual maintenance capital expenditures fluctuate
depending on various factors, including maintenance schedules and
timing of capital projects, among others.
Reconciliation of GAAP "Cash flows from
operating activities" to non-GAAP "Free cash flow" (in
thousands).
Free cash flow is defined as cash flows from operating
activities less capital expenditures and the change in accounts
payable and accrued liabilities from purchases of property plant
and equipment. Free cash flow should not be considered as an
alternative to cash flows from operating activities or any other
measure of financial performance presented in accordance with GAAP.
Our method of computing free cash flow may not be the same method
used by other companies. Free cash flow is a supplemental liquidity
measure used by our management to assess our ability to generate
excess cash flow from our operations.
Three Months Ended
Nine Months Ended
Three Months Ended
September 30,
September 30,
June 30,
2022
2021
2022
2021
2022
Cash flows from operating activities
$
313,237
$
152,761
$
548,554
$
310,977
$
146,281
Capital expenditures
(99,304
)
(33,035
)
(221,286
)
(88,661
)
(62,829
)
Change in accounts payable and accrued
liabilities
30,549
734
39,500
2,281
(4,600
)
Free cash flow
$
244,482
$
120,460
$
366,768
$
224,597
$
78,852
Reconciliation of GAAP "Operating
Expenses" to non-GAAP "Segment Adjusted EBITDA Expense" and
Reconciliation of non-GAAP " EBITDA" to "Segment Adjusted EBITDA"
(in thousands).
Segment Adjusted EBITDA Expense includes operating expenses,
coal purchases and other expense. Transportation expenses are
excluded as these expenses are passed through to our customers and,
consequently, we do not realize any margin on transportation
revenues. Segment Adjusted EBITDA Expense is used as a supplemental
financial measure by our management to assess the operating
performance of our segments. Segment Adjusted EBITDA Expense is a
key component of EBITDA in addition to coal sales, royalty revenues
and other revenues. The exclusion of corporate general and
administrative expenses from Segment Adjusted EBITDA Expense allows
management to focus solely on the evaluation of segment operating
performance as it primarily relates to our operating expenses.
Segment Adjusted EBITDA Expense – Coal Operations excludes expenses
of our Oil & Gas Royalties segment and is adjusted for
intercompany interactions with our Coal Royalties segment.
Three Months Ended
Nine Months Ended
Three Months Ended
September 30,
September 30,
June 30,
2022
2021
2022
2021
2022
Operating expense
$
330,298
$
233,201
$
908,546
$
642,760
$
316,502
Outside coal purchases
—
6,065
151
6,179
151
Other expense (income)
(192
)
84
(1,337
)
2,632
(579
)
Segment Adjusted EBITDA Expense
330,106
239,350
907,360
651,571
316,074
Segment Adjusted EBITDA Expense – Oil
& Gas Royalties
(3,531
)
(2,639
)
(9,766
)
(7,116
)
(3,234
)
Segment Adjusted EBITDA Expense – Coal
Royalties
(5,545
)
(4,258
)
(15,762
)
(13,157
)
(5,398
)
Intercompany coal royalties (1)
16,708
13,456
46,400
36,410
14,525
Segment Adjusted EBITDA Expense – Coal
Operations
$
337,738
$
245,909
$
928,232
$
667,708
$
321,967
______________________
(1)
Intercompany coal royalties earned by our
Coal Royalties segment represent coal royalty expense incurred by
our operating mines and are therefore added back to consolidated
Segment Adjusted EBITDA Expense to reflect Segment Adjusted EBITDA
Expense – Coal Operations.
Segment Adjusted EBITDA is defined as net income attributable to
ARLP before net interest expense, income taxes, depreciation,
depletion and amortization and general and administrative expenses.
Segment Adjusted EBITDA – Coal Operations excludes the contribution
of our Oil & Gas and Coal Royalties segments to allow
management to focus solely on the operating performance of our
Illinois Basin and Appalachia segments.
Three Months Ended
Nine Months Ended
Three Months Ended
September 30,
September 30,
June 30,
2022
2021
2022
2021
2022
EBITDA (See reconciliation to GAAP
above)
$
250,169
$
135,934
$
646,324
$
348,851
$
243,847
General and administrative
21,341
18,655
62,394
51,651
22,457
Segment Adjusted EBITDA
271,510
154,589
708,718
400,502
266,304
Segment Adjusted EBITDA – Total
Royalties
(46,946
)
(28,278
)
(129,582
)
(69,658
)
(43,736
)
Segment Adjusted EBITDA – Coal
Operations
$
224,564
$
126,311
$
579,136
$
330,844
$
222,568
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221031005164/en/
Brian L. Cantrell Alliance Resource Partners, L.P. (918)
295-7673
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