2023 Quarter Highlights
- Revenue of $662.9 million, up 43.0% year-over-year
- Net income of $191.2 million, or $1.45 per unit, a 402.0%
increase compared to $38.1 million, or $0.28 per unit for the 2022
Quarter
- EBITDA of $270.9 million, up 75.2% year-over-year
- Completed $75.1 million in oil & gas mineral interest
acquisitions during the 2023 Quarter
- In March 2023, repurchased $26.6 million of outstanding senior
notes
- Repurchased and retired 860,060 common units for an aggregate
purchase price of $18.2 million during the 2023 Quarter
- Declared a quarterly cash distribution of $0.70 per unit, or
$2.80 per unit annualized, up 100.0% compared to the 2022
Quarter
Alliance Resource Partners, L.P. (NASDAQ: ARLP) ("ARLP" or the
"Partnership") today reported substantial increases to financial
and operating results for the quarter ended March 31, 2023 (the
"2023 Quarter") compared to the quarter ended March 31, 2022 (the
"2022 Quarter"). Total revenues in the 2023 Quarter increased 43.0%
to $662.9 million compared to $463.4 million for the 2022 Quarter
driven primarily by significantly higher coal sales price per ton,
which rose by 43.6%. Increased revenues and lower income tax
expense, partially offset by higher total operating expenses, led
to net income for the 2023 Quarter of $191.2 million, or $1.45 per
basic and diluted limited partner unit, compared to $38.1 million,
or $0.28 per basic and diluted limited partner unit, for the 2022
Quarter. EBITDA also increased 75.2% in the 2023 Quarter to $270.9
million compared to $154.6 million in the 2022 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.)
Compared to our record setting quarter ended December 31, 2022
(the "Sequential Quarter"), total revenues decreased by 5.9%
primarily as a result of lower coal sales volumes due to
extraordinarily strong shipments during the Sequential Quarter and
reduced oil & gas royalties revenues due to lower price
realizations. Total operating expenses decreased 6.0% to $455.6
million due primarily to lower coal sales volumes. Lower revenues,
partially offset by decreased total operating expenses, reduced net
income to $191.2 million compared to $216.9 million in the
Sequential Quarter. EBITDA also decreased by 8.8% in the 2023
Quarter to $270.9 million compared to $296.9 million in the
Sequential Quarter.
CEO Commentary
"ARLP delivered impressive results during the first quarter of
2023," commented Joseph W. Craft III, Chairman, President and Chief
Executive Officer. "Relying upon a solid coal sales contract book,
we were able to achieve significantly higher realized pricing per
ton sold relative to the prior year. Additionally, our coal
operations were able to keep our operating costs per ton in-line
with the Sequential Quarter despite a difficult inflationary
environment and unexpected operating challenges in the 2023
Quarter."
Mr. Craft added, "We remain optimistic our 2023 financial
results will be at record levels. Even though recent mild weather
and lower natural gas prices have softened the near-term domestic
utility markets, we expect export demand to be sufficient to allow
us to increase sales compared to last year."
Segment Results and Analysis
% Change
2023 First
2022 First
Quarter /
2022 Fourth
% Change
(in millions, except per ton and per
BOE data)
Quarter
Quarter
Quarter
Quarter
Sequential
Coal Operations
(1)
Illinois Basin
Coal Operations
Tons sold
6.190
5.882
5.2
%
6.288
(1.6
)%
Coal sales price per ton sold
$
54.43
$
43.17
26.1
%
$
57.47
(5.3
)%
Segment Adjusted EBITDA Expense per
ton
$
33.45
$
30.19
10.8
%
$
37.98
(11.9
)%
Segment Adjusted EBITDA
$
132.0
$
78.2
68.8
%
$
124.4
6.2
%
Appalachia Coal
Operations
Tons sold
2.279
2.280
—
%
3.021
(24.6
)%
Coal sales price per ton sold
$
106.13
$
58.97
80.0
%
$
89.41
18.7
%
Segment Adjusted EBITDA Expense per
ton
$
55.20
$
36.72
50.3
%
$
42.46
30.0
%
Segment Adjusted EBITDA
$
116.6
$
51.1
128.1
%
$
148.9
(21.7
)%
Total Coal
Operations
Tons sold
8.469
8.162
3.8
%
9.309
(9.0
)%
Coal sales price per ton sold
$
68.34
$
47.58
43.6
%
$
67.84
0.7
%
Segment Adjusted EBITDA Expense per
ton
$
39.66
$
32.07
23.7
%
$
39.75
(0.2
)%
Segment Adjusted EBITDA
$
245.7
$
129.0
90.4
%
$
270.5
(9.2
)%
Royalties
(1)
Oil & Gas
Royalties (4)
BOE sold (2)
0.759
0.544
39.5
%
0.715
6.2
%
Oil percentage of BOE
47.3
%
44.0
%
7.5
%
44.9
%
5.3
%
Average sales price per BOE (3)
$
45.42
$
61.35
(26.0
)%
$
55.53
(18.2
)%
Segment Adjusted EBITDA Expense
$
4.4
$
3.3
35.0
%
$
4.6
(4.0
)%
Segment Adjusted EBITDA
$
30.0
$
30.8
(2.6
)%
$
35.3
(14.8
)%
Coal
Royalties
Royalty tons sold
5.057
5.553
(8.9
)%
5.305
(4.7
)%
Revenue per royalty ton sold
$
3.07
$
2.73
12.5
%
$
2.68
14.6
%
Segment Adjusted EBITDA Expense
$
5.4
$
4.8
11.8
%
$
6.1
(11.8
)%
Segment Adjusted EBITDA
$
10.1
$
10.3
(2.2
)%
$
8.2
23.9
%
Total Royalties
(4)
Total royalty revenues
$
51.1
$
48.7
4.9
%
$
54.1
(5.6
)%
Segment Adjusted EBITDA Expense
$
9.8
$
8.1
21.2
%
$
10.7
(8.5
)%
Segment Adjusted EBITDA
$
40.2
$
41.2
(2.5
)%
$
43.4
(7.5
)%
Consolidated
Total (4)(5)
Total revenues
$
662.9
$
463.4
43.0
%
$
704.2
(5.9
)%
Segment Adjusted EBITDA Expense
$
339.3
$
261.5
29.8
%
$
375.5
(9.6
)%
Segment Adjusted EBITDA
$
291.9
$
173.2
68.6
%
$
314.9
(7.3
)%
(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. During the 2023 Quarter, we redefined Total
Coal Operations to reflect the activity of our wholly-owned
subsidiary, Alliance Coal, LLC ("Alliance Coal"), which is the
holding company for our coal mining operations. We have
retrospectively adjusted Total Coal Operations in the 2022 and
Sequential Quarters to be on the same basis.
(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)
Prior periods have been recast to reflect
the JC Resources Acquisition as though we, rather than JC
Resources, acquired the mineral interests in 2019.
(5)
Reflects total consolidated results, which
include our other and corporate activities and eliminations in
addition to the Illinois Basin Coal Operations, Appalachia Coal
Operations, Oil & Gas Royalties and Coal Royalties reportable
segments highlighted above.
Coal Operations
ARLP's coal sales prices per ton increased significantly
compared to the 2022 Quarter as improved price realizations in both
the domestic and export markets drove coal sales prices higher by
26.1% and 80.0% in the Illinois Basin and Appalachia, respectively.
Compared to the Sequential Quarter, lower export prices led to a
decrease of 5.3% in coal sales prices in the Illinois Basin. In
Appalachia, coal sales prices increased by 18.7% as a result of
higher price realizations across all mines in the region. Tons sold
increased by 5.2% in the Illinois Basin compared to the 2022
Quarter due primarily to increased sales volumes from the Gibson
South and River View mines. Compared to the Sequential Quarter,
reduced domestic sales volumes across the region resulted in 24.6%
lower tons sold in Appalachia. ARLP ended the 2023 Quarter with
total coal inventory of 1.3 million tons, representing a decrease
of 0.3 million tons compared to the end of the 2022 Quarter and an
increase of 0.8 million tons compared to the end of the Sequential
Quarter.
Segment Adjusted EBITDA Expense per ton increased by 10.8% and
50.3% in the Illinois Basin and Appalachia, respectively, compared
to the 2022 Quarter, resulting from inflationary pressures on
certain expense items, most notably labor-related expenses and
maintenance costs, and increased sales-related expenses due to
higher price realizations. Appalachia also experienced higher per
ton costs compared to the 2022 Quarter due to higher materials and
supplies costs, increased longwall move days at the Tunnel Ridge
mine, and reduced recoveries at the MC Mining and Mettiki
operations. Compared to the Sequential Quarter, Segment Adjusted
EBITDA Expense decreased 11.9% in the Illinois Basin primarily due
to increased production across the region. In Appalachia, Segment
Adjusted EBITDA Expense per ton increased 30.0% compared to the
Sequential Quarter as a result of increased labor-related expenses,
higher materials and maintenance costs, increased sales-related
expenses due to higher price realizations, two longwall moves at
Tunnel Ridge during the 2023 Quarter, and reduced recoveries across
the region.
Royalties
Segment Adjusted EBITDA for the Oil & Gas Royalties segment
decreased to $30.0 million in the 2023 Quarter compared to $30.8
million and $35.3 million in the 2022 and Sequential Quarters,
respectively, primarily due to lower average sales prices per BOE,
partially offset by higher BOE sold. Higher BOE volumes during the
2023 Quarter resulted from increased drilling and completion
activities on our interests and the acquisition of additional oil
& gas mineral interests.
Segment Adjusted EBITDA for the Coal Royalties segment decreased
2.2% to $10.1 million for the 2023 Quarter compared to $10.3
million for the 2022 Quarter as a result of lower royalty tons sold
and increased selling expenses, partially offset by higher average
royalty rates per ton received from the Partnership's mining
subsidiaries. Compared to the Sequential Quarter, Segment Adjusted
EBITDA increased 23.9% due to higher average royalty rates per ton,
which increased 14.6%, partially offset by lower royalty tons.
Balance Sheet and Liquidity
In January 2023, ARLP entered into a new $425.0 million senior
secured revolving credit facility and $75.0 million term loan (the
"Credit Agreement"), which will mature in March 2027, and renewed
its $60.0 million accounts receivable securitization facility. The
Credit Agreement replaced the previous credit agreement, which was
set to mature in March 2024.
During the 2023 Quarter, ARLP purchased $26.6 million of its
$400 million senior notes due May 1, 2025. As of March 31, 2023,
total debt and finance leases outstanding were $472.2 million,
including $373.4 million in ARLP's 2025 senior notes. The
Partnership's total and net leverage ratio was 0.44 times and 0.19
times, respectively, as of March 31, 2023. ARLP ended the 2023
Quarter with total liquidity of $703.6 million, which included
$271.3 million of cash and cash equivalents and $432.3 million of
borrowings available under its revolving credit and accounts
receivable securitization facilities.
Unit Repurchase Program
ARLP repurchased and retired 860,060 units at an average unit
price of $21.15 for an aggregate purchase price of $18.2 million
during the 2023 Quarter under its recently expanded unit repurchase
program. ARLP has $81.8 million of available capacity under the
program as of the end of the 2023 Quarter. 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.
Distributions
As previously announced on April 28, 2023, the Board of
Directors of ARLP's general partner (the "Board") approved a cash
distribution to unitholders for the 2023 Quarter of $0.70 per unit
(an annualized rate of $2.80 per unit), payable on May 15, 2023, to
all unitholders of record as of the close of trading on May 8,
2023. The announced distribution represents a 100.0% increase over
the cash distribution of $0.35 per unit for the 2022 Quarter and is
consistent with the Sequential Quarter cash distribution.
2023 Quarter Acquisitions of Oil & Gas Royalties
On February 22, 2023, ARLP closed on the previously announced
acquisition of mineral interests in approximately 2,682 oil &
gas net royalty acres in the Delaware Basin for $72.3 million (the
"JC Resources Acquisition"), which was funded with cash on hand.
During the 2023 Quarter, ARLP also separately purchased mineral
interests in the Permian Basin for $2.8 million.
Outlook
"Our contracted coal sales book positions us well to deliver
strong results for 2023 despite natural gas prices being materially
below what we projected at the beginning of the year," commented
Mr. Craft. "Entering the summer peak demand months, we continue to
have a small, uncontracted tonnage position that we plan to sell
into international markets for delivery in the second half of this
year. We also expect several domestic customers will be actively
seeking sizeable commitments for coal to be delivered in 2024 and
2025."
Mr. Craft added, "OPEC's recent decision to reduce supply is
expected to favorably impact oil pricing compared to the 2023
Quarter, which should benefit our Oil & Gas Royalties segment
where we have increased our full year 2023 oil & gas volume
guidance. While lower natural gas prices also impact our royalty
revenue, it is important to note that our trailing three-month cash
flow by product consisted of 75% oil, 10% NGL, and 15% natural
gas."
ARLP is providing the following updated guidance for the 2023
full year:
2023 Full Year
Guidance
Coal
Operations
Volumes
(Million Short Tons)
Illinois Basin Sales Tons
25.5 — 27.0
Appalachia Sales Tons
10.5 — 11.0
Total Sales Tons
36.0 — 38.0
Committed & Priced Sales Tons
2023 — Domestic/Export/Total
30.1/4.2/34.3
2024 — Domestic/Export/Total
22.4/1.0/23.4
Per Ton
Estimates
Coal Sales Price per ton sold (1)
$65.00 — $67.00
Segment Adjusted EBITDA Expense per ton
sold (2)
$39.00 — $42.00
Royalties
Oil & Gas
Royalties
Oil (000 Barrels)
1,400 — 1,500
Natural gas (000 MCF)
4,750 — 5,250
Liquids (000 Barrels)
565 — 615
Segment Adjusted EBITDA Expense (% of Oil
& Gas Royalties Revenue)
~ 11.0%
Coal
Royalties
Royalty tons sold (Million Short Tons)
20.4 — 22.6
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
$290 — $310
General and administrative
$90 — $95
Net interest expense
$31 — $32
Income tax expense
$22 — $24
Total capital expenditures
$400 — $460
Growth capital expenditures
$50 — $60
Maintenance capital expenditures
$350 — $400
Acquisition of oil & gas royalties
(3)
$100 — $110
(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 plus anticipated ground
game acquisitions.
Conference Call
A conference call regarding ARLP's 2023 Quarter financial
results is scheduled for today at 11:00 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 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 13737890.
About Alliance Resource Partners, L.P.
ARLP is a diversified energy company that is currently the
largest coal producer in the eastern United States, supplying
reliable, affordable energy domestically and internationally to
major utilities, metallurgical and industrial users. 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 evolving and positioning itself
as a reliable energy partner for the future by pursuing
opportunities that support the advancement of energy and related
infrastructure.
News, unit prices and additional information about ARLP,
including filings with the Securities and Exchange Commission
("SEC"), are available at www.arlp.com. For more information,
contact the investor relations department of ARLP at (918) 295-7673
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, and our future repurchases of units and
senior notes, among others. These risks to our ability to achieve
these outcomes include, but are not limited to, the following:
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 macroeconomic and market
conditions and market volatility, and the impact of such changes
and volatility on our financial position; changes in global
economic and geo-political conditions or changes in industries in
which our customers operate; changes in commodity prices, demand
and availability which could affect our operating results and cash
flows; the outcome or escalation of current hostilities in Ukraine;
the severity, magnitude, and duration of any future pandemics and
impacts of the pandemic and of businesses' and governments'
responses to the pandemic 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; 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 such
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; 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 shortage 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, 2022, filed on February 24, 2023. 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
March 31,
2023
2022*
Tons Sold
8,469
8,162
Tons Produced
9,244
9,178
Mineral Interest Volumes (BOE)
759
544
SALES AND OPERATING REVENUES:
Coal sales
$
578,784
$
388,360
Oil & gas royalties
34,497
33,396
Transportation revenues
30,238
29,372
Other revenues
19,403
12,294
Total revenues
662,922
463,422
EXPENSES:
Operating expenses (excluding
depreciation, depletion and amortization)
338,723
262,023
Transportation expenses
30,238
29,372
General and administrative
21,085
18,622
Depreciation, depletion and
amortization
65,550
64,140
Total operating expenses
455,596
374,157
INCOME FROM OPERATIONS
207,326
89,265
Interest expense, net
(12,676
)
(9,662
)
Interest income
2,790
35
Equity method investment income
52
883
Other income (expense)
(573
)
567
INCOME BEFORE INCOME TAXES
196,919
81,088
INCOME TAX EXPENSE
4,241
42,715
NET INCOME
192,678
38,373
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST
(1,493
)
(290
)
NET INCOME ATTRIBUTABLE TO ARLP
$
191,185
$
38,083
NET INCOME ATTRIBUTABLE TO ARLP
GENERAL PARTNER
$
1,384
$
1,431
LIMITED PARTNERS
$
189,801
$
36,652
EARNINGS PER LIMITED PARTNER UNIT -
BASIC AND DILUTED
$
1.45
$
0.28
WEIGHTED-AVERAGE NUMBER OF UNITS
OUTSTANDING – BASIC AND DILUTED
127,289,340
127,195,219
* Recast to reflect the JC Resources
Acquisition as though we, rather than JC Resources, acquired the
mineral interests in 2019.
ALLIANCE RESOURCE PARTNERS,
L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except unit
data)
(Unaudited)
March 31,
December 31,
2023
2022*
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
271,250
$
296,023
Trade receivables
266,334
241,412
Other receivables
9,892
8,601
Inventories, net
108,648
77,326
Advance royalties
5,824
7,556
Prepaid expenses and other assets
19,330
26,675
Total current assets
681,278
657,593
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost
4,018,071
3,931,422
Less accumulated depreciation, depletion
and amortization
(2,108,819
)
(2,050,754
)
Total property, plant and equipment,
net
1,909,252
1,880,668
OTHER ASSETS:
Advance royalties
75,331
67,713
Equity method investments
48,949
49,371
Equity securities
42,000
42,000
Operating lease right-of-use assets
15,944
14,950
Other long-term assets
14,995
15,726
Total other assets
197,219
189,760
TOTAL ASSETS
$
2,787,749
$
2,728,021
LIABILITIES AND PARTNERS'
CAPITAL
CURRENT LIABILITIES:
Accounts payable
$
115,106
$
95,122
Accrued taxes other than income taxes
23,554
22,967
Accrued payroll and related expenses
33,772
39,623
Accrued interest
13,002
5,000
Workers' compensation and pneumoconiosis
benefits
14,098
14,099
Other current liabilities
51,706
53,790
Current maturities, long-term debt,
net
22,224
24,970
Total current liabilities
273,462
255,571
LONG-TERM LIABILITIES:
Long-term debt, excluding current
maturities, net
436,659
397,203
Pneumoconiosis benefits
100,825
100,089
Accrued pension benefit
12,250
12,553
Workers' compensation
40,117
39,551
Asset retirement obligations
143,010
142,254
Long-term operating lease obligations
13,424
12,132
Deferred income tax liabilities
35,583
35,814
Other liabilities
25,258
24,828
Total long-term liabilities
807,126
764,424
Total liabilities
1,080,588
1,019,995
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
ARLP Partners' Capital:
Limited Partners - Common Unitholders
127,195,219 units outstanding
1,721,938
1,656,025
General Partner's interest
—
66,548
Accumulated other comprehensive loss
(40,489
)
(41,054
)
Total ARLP Partners' Capital
1,681,449
1,681,519
Noncontrolling interest
25,712
26,507
Total Partners' Capital
1,707,161
1,708,026
TOTAL LIABILITIES AND PARTNERS'
CAPITAL
$
2,787,749
$
2,728,021
* Recast to reflect the JC Resources
Acquisition as though we, rather than JC Resources, acquired the
mineral interests in 2019.
ALLIANCE RESOURCE PARTNERS,
L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2023
2022*
CASH FLOWS FROM OPERATING
ACTIVITIES
$
223,259
$
90,626
CASH FLOWS FROM INVESTING
ACTIVITIES:
Property, plant and equipment:
Capital expenditures
(95,474
)
(59,153
)
Change in accounts payable and accrued
liabilities
12,110
13,551
Proceeds from sale of property, plant and
equipment
2,395
928
Contributions to equity method
investments
(540
)
—
JC Resources acquisition
(64,999
)
—
Oil & gas reserve acquisition
(2,800
)
—
Other
589
(851
)
Net cash used in investing activities
(148,719
)
(45,525
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments on equipment financings
(3,759
)
(4,472
)
Borrowing under long-term debt
75,000
—
Payments on long-term debt
(26,633
)
—
Payments on finance lease obligations
(278
)
(203
)
Payment of debt issuance costs
(11,653
)
—
Payments for purchases of units under unit
repurchase program
(18,209
)
—
Payments for tax withholdings related to
settlements under deferred compensation plans
(9,320
)
—
Excess purchase price over the contributed
basis from JC Resources acquisition
(7,251
)
—
Cash retained by JC Resources in
acquisition
(2,933
)
(1,590
)
Distributions paid to Partners
(91,938
)
(32,750
)
Other
(2,339
)
(298
)
Net cash used in financing activities
(99,313
)
(39,313
)
NET CHANGE IN CASH AND CASH
EQUIVALENTS
(24,773
)
5,788
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD
296,023
122,403
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
$
271,250
$
128,191
* Recast to reflect the JC Resources
Acquisition as though we, rather than JC Resources, acquired the
mineral interests in 2019.
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
Three Months Ended
March 31,
December 31,
2023
2022 (1)
2022 (1)
Net income attributable to ARLP
$
191,185
$
38,083
$
216,881
Depreciation, depletion and
amortization
65,550
64,140
74,171
Interest expense, net
11,293
9,697
7,963
Capitalized interest
(1,407
)
(70
)
(417
)
Income tax expense (benefit)
4,241
42,715
(1,668
)
EBITDA
270,862
154,565
296,930
Interest expense, net
(11,293
)
(9,697
)
(7,963
)
Income tax (expense) benefit
(4,241
)
(42,715
)
1,668
Deferred income tax expense (benefit)
(2)
(372
)
37,294
(2,473
)
Estimated maintenance capital expenditures
(3)
(65,170
)
(51,947
)
(47,731
)
Distributable Cash Flow
$
189,786
$
87,500
$
240,431
Distributions paid to partners
$
91,938
$
32,750
$
65,449
Distribution Coverage Ratio
2.06
2.67
3.67
(1)
Recast to reflect the JC Resources Acquisition as though we,
rather than JC Resources, acquired the mineral interests in
2019.
(2)
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.
(3)
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
Three Months Ended
March 31,
December 31,
2023
2022 (1)
2022 (1)
Cash flows from operating activities
$
223,259
$
90,626
$
246,143
Capital expenditures
(95,474
)
(59,153
)
(65,108
)
Change in accounts payable and accrued
liabilities
12,110
13,551
(3,544
)
Free cash flow
$
139,895
$
45,024
$
177,491
(1) Recast to reflect the JC
Resources Acquisition as though we, rather than JC Resources,
acquired the mineral interests in 2019.
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, if applicable, and other income or expense.
Transportation expenses are excluded as these expenses are passed
on 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 represents Segment Adjusted EBITDA Expense from our
wholly-owned subsidiary, Alliance Coal, which holds our coal mining
operations and related support activities.
Three Months Ended
Three Months Ended
March 31,
December 31,
2023
2022 (1)
2022 (1)
Operating expense
$
338,723
$
262,023
$
378,515
Other expense (income)
573
(567
)
(3,016
)
Segment Adjusted EBITDA Expense
339,296
261,456
375,499
Segment Adjusted EBITDA Expense – Non Coal
Operations (2)
(3,420
)
286
(5,452
)
Segment Adjusted EBITDA Expense – Coal
Operations
$
335,876
$
261,742
$
370,047
(1)
Recast to reflect the JC Resources Acquisition as though we,
rather than JC Resources, acquired the mineral interests in
2019.
(2)
Non Coal Operations represent activity outside of Alliance Coal
and primarily consist of Total Royalties, our investments in the
advancement of energy and related infrastructure and various
eliminations primarily between Alliance Coal and our Coal Royalty
segment.
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
represents Segment Adjusted EBITDA from our wholly-owned
subsidiary, Alliance Coal, which holds our coal mining operations
and related support activities and allows management to focus
primarily on the operating performance of our Illinois Basin and
Appalachia segments.
Three Months Ended
Three Months Ended
March 31,
December 31,
2023
2022 (1)
2022 (1)
EBITDA (See reconciliation to GAAP
above)
$
270,862
$
154,565
$
296,930
General and administrative
21,085
18,622
17,963
Segment Adjusted EBITDA
291,947
173,187
314,893
Segment Adjusted EBITDA – Non Coal
Operations (2)
(46,273
)
(44,182
)
(44,428
)
Segment Adjusted EBITDA – Coal
Operations
$
245,674
$
129,005
$
270,465
(1)
Recast to reflect the JC Resources Acquisition as though we,
rather than JC Resources, acquired the mineral interests in
2019.
(2)
Non Coal Operations represent activity outside of Alliance Coal
and primarily consist of Total Royalties, our investments in the
advancement of energy and related infrastructure and various
eliminations primarily between Alliance Coal and our Coal Royalty
segment.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230502005334/en/
Investor Relations Contact Cary P. Marshall Senior Vice
President and Chief Financial Officer 918-295-7673
investorrelations@arlp.com
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