Highlights
- Fourth quarter 2022 revenue of $700.7 million, net income of
$214.5 million, and EBITDA of $293.9 million, up 48.0%, 313.8%, and
125.7%, respectively, year-over-year
- Record full year 2022 revenue of $2.4 billion, net income of
$577.2 million, and EBITDA of $940.2 million, up 53.3%, 224.0%, and
96.3%, respectively, year-over-year
- In January 2023, increased quarterly cash distribution rate to
$0.70 per unit, or $2.80 per unit annualized, up 40.0% from the
last quarter and 180.0% year-over-year
- In January 2023, increased unit repurchase program to $100.0
million
- Completed $81.2 million acquisition of previously announced oil
& gas mineral interests in October 2022, and today, separately
announced a $72.3 million acquisition of oil & gas mineral
interests
- In January 2023, successfully refinanced existing revolving
credit facility, extending liquidity and financial flexibility
through March 2027
- 2023 expected coal sales volumes approximately 94% committed
and priced above 2022 per ton levels
Alliance Resource Partners, L.P. (NASDAQ: ARLP) ("ARLP" or the
"Partnership") today reported substantial increases to financial
and operating results for the quarter and year ended December 31,
2022 (the "2022 Quarter" and "2022 Full Year", respectively)
compared to the quarter and year ended December 31, 2021 (the "2021
Quarter" and "2021 Full Year", respectively).
Total revenues in the 2022 Quarter increased 48.0% to a record
$700.7 million compared to $473.5 million for the 2021 Quarter as a
result of significantly higher coal sales and oil & gas
royalties revenues. Increased revenues, partially offset by higher
total operating expenses, led net income for the 2022 Quarter to a
record $214.5 million, or $1.63 per basic and diluted limited
partner unit, compared to $51.8 million, or $0.40 per basic and
diluted limited partner unit, for the 2021 Quarter. EBITDA also
increased 125.7% in the 2022 Quarter to $293.9 million compared to
$130.2 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,
please see the end of this release.)
2022 Full Year performance saw total revenues increase 53.3% to
a record $2.4 billion compared to $1.6 billion for the 2021 Full
Year, primarily due to substantial increases in prices and volumes
from both ARLP’s coal operations and royalty segments. Higher
revenues, partially offset by increased total operating and income
tax expenses, led to significantly higher net income, which rose
224.0% to a record $577.2 million, or $4.39 per basic and diluted
limited partner unit, compared to $178.2 million, or $1.36 per
basic and diluted limited partner unit, for the 2021 Full Year.
EBITDA increased 96.3% to $940.2 million compared to $479.1 million
for the 2021 Full Year.
CEO Commentary
"ARLP’s record performance during the 2022 quarter and full
year, in a supply and transportation constrained operating
environment, is a testament to our team’s ability to execute and
deliver reliable energy supply under challenging circumstances,"
commented Joseph W. Craft III, Chairman, President, and Chief
Executive Officer. "In 2022, ARLP achieved its highest reported
EBITDA and operating cash flow in the Partnership’s 23-year
history, driven by continued growth in sales volumes coupled with
higher price realizations across our coal operations and royalty
segments."
Mr. Craft added, "With our strong balance sheet and relentless
focus on cash flow generation, we are well positioned to capitalize
on growth opportunities in the market and return capital to our
unitholders. Based on our highly committed coal sales book and
visibility into our end markets, last week we were pleased to
announce a 40% increase in ARLP’s quarterly cash distribution rate
to $0.70 per unit, or $2.80 per unit on an annualized basis. This
increase is consistent with our long-term strategic capital
allocation plans and is well-supported by strong visibility into
future cash flows with approximately 94% of our expected 2023 coal
sales volumes committed and priced as we enter the year. I am proud
of the team’s record of success, and, as reflected in our initial
guidance, look forward to achieving even stronger results in
2023."
Segment Results and Analysis
% Change
2022 Fourth
2021 Fourth
Quarter /
2022 Third
% Change
(in millions, except per ton and per
BOE data)
Quarter
Quarter
Quarter
Quarter
Sequential
Coal Operations
(1)
Illinois
Basin
Tons sold
6.288
6.329
(0.6
)%
6.109
2.9
%
Coal sales price per ton sold
$
57.47
$
41.63
38.0
%
$
51.44
11.7
%
Segment Adjusted EBITDA Expense per
ton
$
37.98
$
31.27
21.5
%
$
31.91
19.0
%
Segment Adjusted EBITDA
$
124.4
$
67.7
83.7
%
$
120.8
3.0
%
Appalachia
Tons sold
3.021
2.771
9.0
%
3.076
(1.8
)%
Coal sales price per ton sold
$
89.41
$
53.30
67.7
%
$
76.82
16.4
%
Segment Adjusted EBITDA Expense per
ton
$
42.46
$
37.47
13.3
%
$
43.78
(3.0
)%
Segment Adjusted EBITDA
$
148.9
$
46.7
218.7
%
$
102.0
46.0
%
Total Coal
Operations
Tons sold
9.309
9.100
2.3
%
9.185
1.4
%
Coal sales price per ton sold
$
67.84
$
45.19
50.1
%
$
59.94
13.2
%
Segment Adjusted EBITDA Expense per
ton
$
40.71
$
33.86
20.2
%
$
36.77
10.7
%
Segment Adjusted EBITDA
$
271.4
$
116.4
133.1
%
$
224.6
20.9
%
Royalties
(1)
Oil & Gas
Royalties
BOE sold (2)
0.653
0.458
42.6
%
0.551
18.5
%
Oil percentage of BOE
45.1
%
45.9
%
(1.7
)%
43.8
%
3.0
%
Average sales price per BOE (3)
$
55.54
$
51.80
7.2
%
$
64.03
(13.3
)%
Segment Adjusted EBITDA Expense
$
4.2
$
2.8
48.0
%
$
3.5
18.5
%
Segment Adjusted EBITDA
$
32.2
$
22.4
44.1
%
$
35.8
(9.9
)%
Coal
Royalties
Royalty tons sold
5.305
5.675
(6.5
)%
5.654
(6.2
)%
Revenue per royalty ton sold
$
2.68
$
2.64
1.5
%
$
2.96
(9.5
)%
Segment Adjusted EBITDA Expense
$
6.1
$
5.1
19.5
%
$
5.5
10.2
%
Segment Adjusted EBITDA
$
8.2
$
9.9
(17.9
)%
$
11.2
(26.8
)%
Total
Royalties
Total royalty revenues
$
50.6
$
39.4
28.3
%
$
54.3
(6.8
)%
Segment Adjusted EBITDA Expense
$
10.3
$
7.9
29.7
%
$
9.1
13.4
%
Segment Adjusted EBITDA
$
40.4
$
32.3
25.0
%
$
46.9
(14.0
)%
Consolidated
Total (4)
Total revenues
$
700.7
$
473.5
48.0
%
$
628.4
11.5
%
Segment Adjusted EBITDA Expense
$
375.1
$
301.1
24.6
%
$
330.1
13.6
%
Segment Adjusted EBITDA
$
311.8
$
148.8
109.6
%
$
271.5
14.9
%
____________________ (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.
Coal Operations
ARLP’s coal sales prices per ton increased significantly
compared to the 2021 Quarter as improved price realizations in both
the domestic and export markets drove coal sales prices higher by
38.0% and 67.7% in the Illinois Basin and Appalachia, respectively.
Compared to the quarter ended September 30, 2022 (the "Sequential
Quarter"), higher export prices led to an 11.7% increase in coal
sales price realizations in the Illinois Basin while higher
domestic prices primarily from our Tunnel Ridge mine resulted in an
increase of 16.4% in Appalachian coal sales prices. Tons sold
remained relatively consistent in the Illinois Basin compared to
the 2021 Quarter while increasing by 9.0% in Appalachia due
primarily to increased sales volumes from Tunnel Ridge as a result
of higher recoveries. Compared to the Sequential Quarter, increased
sales volumes from our Gibson South and River View mines resulted
in 2.9% higher tons sold in the Illinois Basin. Coal sales volumes
in Appalachia decreased by 1.8% compared to the Sequential Quarter
due to higher sales from inventory at Tunnel Ridge in the
Sequential Quarter. ARLP ended the 2022 Quarter with total coal
inventory of 0.5 million tons, which included 0.2 million tons
staged at ports for vessel export in early 2023.
Segment Adjusted EBITDA Expense per ton increased by 21.5% and
13.3% in the Illinois Basin and Appalachia, respectively, compared
to the 2021 Quarter primarily as a result of ongoing inflationary
pressures on certain expense items, most notably labor-related
expenses, supply and maintenance costs, increased sales-related
expenses due to higher price realizations, and $6.5 million of
non-cash accruals for certain long-term liabilities. Also specific
to the 2022 Quarter, a thermal event at our Hamilton mine resulted
in an unexpected outage that lasted approximately four weeks. There
were no injuries to personnel, no damage to the equipment, and
mining operations returned to normal production levels in December
2022; however, third-party expenses related to the event were
approximately $5.8 million and approximately 0.5 million tons of
production was lost in the 2022 Quarter. Excluding certain non-cash
liability accruals and the Hamilton event related expenses,
Illinois Basin Segment Adjusted EBITDA Expense per ton for the 2022
Quarter would have been more in-line with the percentage increases
realized in Appalachia for the 2022 Quarter.
Royalties
Segment Adjusted EBITDA for our Oil & Gas Royalties segment
increased 44.1% to $32.2 million in the 2022 Quarter compared to
$22.4 million in the 2021 Quarter primarily due to significantly
higher oil & gas royalty volumes, which rose by 42.6% to a
record 653,000 BOE sold as a result of increased drilling and
completion activities and additional volumes from oil & gas
mineral interest acquisitions completed during 2022. Compared to
the Sequential Quarter, Segment Adjusted EBITDA decreased by 9.9%
in the 2022 Quarter primarily due to lower price realizations,
which decreased by 13.3%, partially offset by higher oil & gas
volumes, which increased by 18.5%.
Segment Adjusted EBITDA for our Coal Royalties segment decreased
17.9% to $8.2 million for the 2022 Quarter compared to $9.9 million
for the 2021 Quarter primarily related to the Hamilton thermal
event which reduced royalty tons sold by 8.5%. Compared to the
Sequential Quarter, Segment Adjusted EBITDA decreased 26.8% due to
lower royalty tons sold and average royalty rates per ton due to
the Hamilton thermal event.
Balance Sheet and Liquidity
In January 2023, the Partnership entered into a new $425.0
million senior secured revolving credit facility and $75.0 million
term loan (the "Credit Facilities"), which will mature in March
2027, and renewed its $60.0 million accounts receivable
securitization facility. The Credit Facilities will replace the
previous revolving credit facility, which was set to mature in
March 2024. More information regarding the Credit Facilities is
provided in our Form 8-K filing made on January 20, 2023.
As of December 31, 2022, total debt and finance leases
outstanding were $427.6 million, including $400.0 million in ARLP’s
2025 senior notes. The Partnership’s total and net leverage ratio
improved to 0.45 times and 0.14 times, respectively, during the
2022 Quarter. ARLP ended the year with total liquidity of $762.8
million, which included $296.0 million of cash and cash equivalents
and $466.7 million of borrowings available under our previous
revolving credit and accounts receivable securitization
facilities.
Distributions
As previously announced on January 27, 2023, the Board of
Directors of ARLP’s general partner (the "Board") approved a cash
distribution to unitholders for the 2022 Quarter of $0.70 per unit
(an annualized rate of $2.80 per unit), payable on February 14,
2023, to all unitholders of record as of the close of trading on
February 7, 2023. The announced distribution represents a 180.0%
increase over the cash distribution of $0.25 per unit for the 2021
Quarter and is a 40.0% increase over the cash distribution of $0.50
per unit for the Sequential Quarter.
Unit Repurchase Program
ARLP also announced today that the Board has authorized an
increase to the previously established unit repurchase program,
which had $6.5 million of available capacity as of December 31,
2022. The expanded unit repurchase program authorizes ARLP to
repurchase up to $100.0 million of its outstanding limited partner
common units. The unit repurchase program announced today is
intended to enhance ARLP’s ability to achieve its goal of creating
long-term value for unitholders and, along with management’s
objective of increasing quarterly cash distributions, increases
flexibility in returning cash to unitholders. Future unit
repurchases and distributions will be subject to ongoing Board
review and authorization and will be based on a number of factors,
including ARLP’s financial and operating performance and other
capital requirements as well as future economic, business and
market conditions.
The unit repurchase program has no time limit and ARLP may
repurchase units from time to time in the open market or in other
privately negotiated transactions. The unit repurchase program
authorization does not obligate ARLP to repurchase any dollar
amount or number of its units and repurchases may be commenced or
suspended from time to time without prior notice.
January 2023 Acquisition of Oil & Gas Royalties
On January 27, 2023, the Board approved an acquisition of 2,682
net oil and gas royalty acres in the Permian Basin from JC
Resources LP, an entity owned by Mr. Craft, for a cash purchase
price of $72.3 million, subject to customary closing adjustments.
Upon closing, the acquisition is expected to be immediately
accretive to cash flow. The purchase price will be funded with
available cash and is expected to close within the next 30 days
based on an effective date of January 1, 2023. Since the
acquisition involves a related party, terms of the transaction were
approved by the Board’s conflicts committee, which is comprised
entirely of independent directors.
Outlook
"The supply driven energy crisis, Russia’s invasion of Ukraine
and the steep build of inflation disrupted energy prices and placed
a new emphasis on energy security in 2022," commented Mr. Craft.
"Europe’s shift from Russian energy and U.S. and its allies’
economic sanctions are lowering Russian supply to the world,
changing global energy trade routes and energy markets for several
years to come, if not permanently. U.S. natural gas and coal
exports should benefit in 2023 and beyond."
"Due in part to this ongoing disruption, ARLP is well positioned
to achieve another record year in 2023 by increasing production and
sales by one to two million tons and relying on our highly
committed coal contract book and a favorable market outlook to
deliver 13.0 to 17.0% higher realized pricing compared to 2022,"
commented Mr. Craft. "Even though natural gas prices have fallen
recently due to the warm winter experienced so far, coal prices
remain elevated in anticipation of international demand firming
throughout the year as China’s economy reopens and as European
markets look to replace 40 million tons of Russian coal imports
received last year but unavailable this year. While the recent
decline in natural gas prices are expected to impact our oil &
gas royalties segment in the front half of the year, our coal
segment should not be meaningfully affected due to our contracted
position. In the back of this year and into 2024, we expect global
economic activity will result in rising oil, gas and coal prices,
and support our guidance."
Mr. Craft concluded, "We are beginning to see the significant
inflation experienced last year start to level off, however labor
pressures and higher sales related expenses as a result of higher
price realizations and coal sales volumes will continue to add to
our costs in 2023. However, we expect favorable market forces and
our current coal sales commitments will drive top line growth that
should more than offset these inflationary pressures as margins are
expected to improve across our business in 2023 versus the prior
year."
ARLP is providing the following initial guidance for the 2023
full year:
2023 Full Year
Guidance
Coal
Operations
Volumes
(Million Short Tons)
Illinois Basin Sales Tons
26.0 — 27.5
Appalachia Sales Tons
10.0 — 10.5
Total Sales Tons
36.0 — 38.0
Committed & Priced Sales Tons
2023 — Domestic/Export/Total
31.4/3.3/34.7
2024 — Domestic/Export/Total
22.7/1.0/23.7
Per Ton
Estimates
Coal Sales Price per ton sold (1)
$67.00 — $69.00
Segment Adjusted EBITDA Expense per ton
sold (2)
$40.25 — $42.25
Royalties
Oil & Gas
Royalties
Oil (000 Barrels)
1,250 — 1,350
Natural gas (000 MCF)
4,400 — 4,900
Liquids (000 Barrels)
535 — 585
Segment Adjusted EBITDA Expense (% of Oil
& Gas Royalties Revenue)
~ 11.0%
Coal
Royalties
Royalty tons sold (Million Short Tons)
20.9 — 23.1
Revenue per royalty ton sold
$3.00 — $3.20
Segment Adjusted EBITDA Expense per
royalty ton sold
$1.00 — $1.10
Consolidated (Millions)
Depreciation, depletion and
amortization
$300 — $325
General and administrative
$90 — $95
Net interest expense
$31 — $32
Income tax expense
$18 — $19
Total capital expenditures
$400 — $450
Growth capital expenditures
$50 — $60
Maintenance capital expenditures
$350 — $390
Acquisition of oil & gas royalties
(3)
$72
_________________________ (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.
(3)
Acquisition of oil & gas royalties
reflects the $72.3 million acquisition from JC Resources LP, as
described in the section above "January 2023 Acquisition of Oil
& Gas Royalties."
Conference Call
A conference call regarding ARLP's 2022 Quarter and Year
financial results and 2023 outlook 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 13735338.
About Alliance Resource Partners, L.P.
ARLP is a diversified energy company that is one of the largest
coal producers 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, and 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, 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 commodity 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 oil & gas mineral interests due to
low commodity 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 and
to successfully integrate acquisitions into our business and
achieve the anticipated benefits therefrom; 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, June 30, 2022 and September 30, 2022, filed on May
9, 2022, August 8, 2022 and November 7, 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
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Tons Sold
9,309
9,100
35,589
32,268
Tons Produced
8,433
8,739
35,477
32,207
Mineral Interest Volumes (BOE)
653
458
2,208
1,663
SALES AND OPERATING REVENUES:
Coal sales
$
631,499
$
411,198
$
2,102,229
$
1,386,923
Oil & gas royalties
36,236
23,766
138,402
74,988
Transportation revenues
20,555
24,454
113,860
69,607
Other revenues
12,437
14,054
52,020
38,458
Total revenues
700,727
473,472
2,406,511
1,569,976
EXPENSES:
Operating expenses (excluding
depreciation, depletion and amortization)
378,089
300,497
1,286,635
943,257
Transportation expenses
20,555
24,454
113,860
69,607
Outside coal purchases
—
193
151
6,372
General and administrative
17,940
18,509
80,334
70,160
Depreciation, depletion and
amortization
73,568
68,679
273,759
261,377
Settlement gain
(6,664
)
—
(6,664
)
—
Total operating expenses
483,488
412,332
1,748,075
1,350,773
INCOME FROM OPERATIONS
217,239
61,140
658,436
219,203
Interest expense, net
(9,028
)
(9,583
)
(37,332
)
(39,229
)
Interest income
1,481
37
2,035
88
Equity method investment income
1,058
1,024
5,634
2,130
Other income (expense)
3,016
(388
)
4,353
(3,020
)
INCOME BEFORE INCOME TAXES
213,766
52,230
633,126
179,172
INCOME TAX EXPENSE (BENEFIT)
(1,668
)
190
53,978
417
NET INCOME
215,434
52,040
579,148
178,755
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST
(981
)
(214
)
(1,958
)
(598
)
NET INCOME ATTRIBUTABLE TO ARLP
$
214,453
$
51,826
$
577,190
$
178,157
EARNINGS PER LIMITED PARTNER UNIT -
BASIC AND DILUTED
$
1.63
$
0.40
$
4.39
$
1.36
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)
December 31,
2022
2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
296,023
$
122,403
Trade receivables
238,610
129,531
Other receivables
8,601
680
Inventories, net
77,326
60,302
Advance royalties
7,556
4,958
Prepaid expenses and other assets
26,675
21,354
Total current assets
654,791
339,228
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost
3,857,390
3,608,347
Less accumulated depreciation, depletion
and amortization
(2,040,468
)
(1,909,669
)
Total property, plant and equipment,
net
1,816,922
1,698,678
OTHER ASSETS:
Advance royalties
67,713
63,524
Equity method investments
49,371
26,325
Equity securities
42,000
—
Operating lease right-of-use assets
14,950
14,158
Other long-term assets
15,726
17,493
Total other assets
189,760
121,500
TOTAL ASSETS
$
2,661,473
$
2,159,406
LIABILITIES AND PARTNERS'
CAPITAL
CURRENT LIABILITIES:
Accounts payable
$
95,122
$
69,586
Accrued taxes other than income taxes
22,967
17,787
Accrued payroll and related expenses
39,623
36,805
Accrued interest
5,000
5,000
Workers' compensation and pneumoconiosis
benefits
14,099
12,293
Other current liabilities
53,790
20,035
Current maturities, long-term debt,
net
24,970
16,071
Total current liabilities
255,571
177,577
LONG-TERM LIABILITIES:
Long-term debt, excluding current
maturities, net
397,203
418,942
Pneumoconiosis benefits
100,089
107,560
Accrued pension benefit
12,553
25,590
Workers' compensation
39,551
44,911
Asset retirement obligations
142,254
123,517
Long-term operating lease obligations
12,132
12,366
Deferred income tax liabilities
35,814
391
Other liabilities
24,828
22,483
Total long-term liabilities
764,424
755,760
Total liabilities
1,019,995
933,337
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
ARLP Partners' Capital:
Limited Partners - Common Unitholders
127,195,219 units outstanding
1,656,025
1,279,183
Accumulated other comprehensive loss
(41,054
)
(64,229
)
Total ARLP Partners' Capital
1,614,971
1,214,954
Noncontrolling interest
26,507
11,115
Total Partners' Capital
1,641,478
1,226,069
TOTAL LIABILITIES AND PARTNERS'
CAPITAL
$
2,661,473
$
2,159,406
ALLIANCE RESOURCE PARTNERS,
L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Year Ended
December 31,
2022
2021
CASH FLOWS FROM OPERATING
ACTIVITIES:
$
791,812
$
425,202
CASH FLOWS FROM INVESTING
ACTIVITIES:
Property, plant and equipment:
Capital expenditures
(286,394
)
(122,984
)
Increase in accounts payable and accrued
liabilities
35,956
2,594
Proceeds from sale of property, plant and
equipment
7,468
7,719
Contributions to equity method
investments
(24,087
)
—
Purchase of equity securities
(42,000
)
—
Payments for acquisitions of
businesses
(92,618
)
—
Oil & gas reserve acquisition
—
(30,960
)
Other
(1,663
)
943
Net cash used in investing activities
(403,338
)
(142,688
)
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
(16,071
)
(17,299
)
Borrowings under revolving credit
facilities
—
15,000
Payments under revolving credit
facilities
—
(102,500
)
Borrowings from line of credit
—
5,340
Payment on line of credit
—
(5,340
)
Payments on finance lease obligations
(840
)
(766
)
Distributions paid to Partners
(196,347
)
(52,158
)
Other
(1,596
)
(2,062
)
Net cash used in financing activities
(214,854
)
(215,685
)
NET CHANGE IN CASH AND CASH
EQUIVALENTS
173,620
66,829
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD
122,403
55,574
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
$
296,023
$
122,403
Reconciliation of Non-GAAP Financial Measures
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
Year Ended
Three Months Ended
December 31,
December 31,
September 30,
2022
2021
2022
2021
2022
Net income attributable to ARLP
$
214,453
$
51,826
$
577,190
$
178,157
$
164,607
Depreciation, depletion and
amortization
73,568
68,679
273,759
261,377
70,143
Interest expense, net
7,964
9,628
36,219
39,537
9,083
Capitalized interest
(417
)
(82
)
(922
)
(396
)
(264
)
Income tax expense (benefit)
(1,668
)
190
53,978
417
6,600
EBITDA
293,900
130,241
940,224
479,092
250,169
Interest expense, net
(7,964
)
(9,628
)
(36,219
)
(39,537
)
(9,083
)
Income tax (expense) benefit
1,668
(190
)
(53,978
)
(417
)
(6,600
)
Deferred income tax expense (benefit)
(1)
(2,473
)
123
34,801
349
268
Estimated maintenance capital expenditures
(2)
(47,731
)
(42,821
)
(200,800
)
(157,814
)
(50,872
)
Distributable Cash Flow
$
237,400
$
77,725
$
684,028
$
281,673
$
183,882
Distributions paid to partners
$
65,449
$
26,072
$
196,347
$
52,158
$
52,338
Distribution Coverage Ratio
3.63
2.98
3.48
5.40
3.51
_______________________ (1)
Deferred income tax expense is the amount of income tax expense
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 2023 planning horizon, average annual estimated
maintenance capital expenditures are assumed to be $7.05 per ton
produced compared to an estimated $5.66 per ton produced in 2022.
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
Year Ended
Three Months Ended
December 31,
December 31,
September 30,
2022
2021
2022
2021
2022
Cash flows from operating activities
$
243,258
$
114,225
$
791,812
$
425,202
$
313,237
Capital expenditures
(65,108
)
(34,323
)
(286,394
)
(122,984
)
(99,304
)
Change in accounts payable and accrued
liabilities
(3,544
)
313
35,956
2,594
30,549
Free cash flow
$
174,606
$
80,215
$
541,374
$
304,812
$
244,482
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 income or 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
Year Ended
Three Months Ended
December 31,
December 31,
September 30,
2022
2021
2022
2021
2022
Operating expense
$
378,089
$
300,497
$
1,286,635
$
943,257
$
330,298
Outside coal purchases
—
193
151
6,372
—
Other expense (income)
(3,016
)
388
(4,353
)
3,020
(192
)
Segment Adjusted EBITDA Expense
375,073
301,078
1,282,433
952,649
330,106
Segment Adjusted EBITDA Expense – Oil
& Gas Royalties
(4,184
)
(2,827
)
(13,950
)
(9,943
)
(3,531
)
Segment Adjusted EBITDA Expense – Coal
Royalties
(6,109
)
(5,112
)
(21,871
)
(18,269
)
(5,545
)
Intercompany coal royalties (1)
14,224
14,992
60,624
51,402
16,708
Segment Adjusted EBITDA Expense – Coal
Operations
$
379,004
$
308,131
$
1,307,236
$
975,839
$
337,738
_____________________ (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, general and administrative expenses and
settlement gains. 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
Year Ended
Three Months Ended
December 31,
December 31,
September 30,
2022
2021
2022
2021
2022
EBITDA (See reconciliation to GAAP
above)
$
293,900
$
130,241
$
940,224
$
479,092
$
250,169
General and administrative
17,940
18,509
80,334
70,160
21,341
Segment Adjusted EBITDA
311,840
148,750
1,020,558
549,252
271,510
Segment Adjusted EBITDA – Total
Royalties
(40,395
)
(32,318
)
(169,977
)
(101,976
)
(46,946
)
Segment Adjusted EBITDA – Coal
Operations
$
271,445
$
116,432
$
850,581
$
447,276
$
224,564
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230130005185/en/
Brian L. Cantrell, Chief Financial Officer 918-295-7674
investorrelations@arlp.com
Alliance Resource Partners (NASDAQ:ARLP)
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