Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported
improved financial and operating performance for the quarter ended
December 31, 2020 (the “2020 Quarter”) compared to the quarter
ended September 30, 2020 (the “Sequential Quarter”). Increased coal
sales and oil & gas royalty revenues drove total consolidated
revenues higher by 3.1% to $366.5 million compared to the
Sequential Quarter. Higher revenues led to increased net income and
EBITDA, which rose 28.8% to $35.0 million and 2.1% to $121.4
million, respectively, each compared to the Sequential Quarter.
(Unless otherwise noted, all references in the text of this release
to “net income (loss)” refer to “net income (loss) attributable to
ARLP.” For a definition of EBITDA and related reconciliation to the
comparable GAAP financial measure, please see the end of this
release.)
Total revenues in the 2020 Quarter were 19.2% lower compared to
the quarter ended December 31, 2019 (the “2019 Quarter”),
reflecting the impacts of reduced global energy demand resulting
from the COVID-19 pandemic. Lower revenues were more than offset by
ARLP’s expense reduction initiatives implemented during 2020 in
response to the pandemic, leading to a 35.6% increase in net income
for the 2020 Quarter compared to the 2019 Quarter. EBITDA declined
by 3.8% compared to the 2019 Quarter due to lower oil & gas
volumes and prices in the 2020 Quarter.
ARLP’s performance and results for the year ended December 31,
2020 (the “2020 Year”) were also impacted by the effects of
pandemic-related disruptions. Compared to the year ended December
31, 2019 (the “2019 Year”), total revenues for the 2020 Year
decreased 32.3% to $1.33 billion. Lower revenues and a non-cash
goodwill impairment charge of $132.0 million, partially offset by
lower operating expenses, resulted in a net loss of $129.2 million.
This compares to net income of $399.4 million for the 2019 Year,
which included a non-cash net gain of $170.0 million related to the
AllDale Acquisition. Excluding the impact of non-cash items,
Adjusted net income and Adjusted EBITDA for the 2020 Year decreased
to $27.8 million and $386.7 million, respectively, compared to
$244.6 million and $599.0 million, respectively, for the 2019 Year.
(For definitions of Adjusted net income and Adjusted EBITDA and
related reconciliations to comparable GAAP financial measures,
please see the end of this release.)
“I am extremely proud of ARLP’s performance and accomplishments
during the unprecedented turmoil we experienced in 2020,” said
Joseph W. Craft III, Chairman, President and Chief Executive
Officer. “Amid the uncertainties created by the COVID-19 pandemic,
ARLP’s operating teams performed heroically to ensure that our
essential coal production remained available to our customers to
protect the reliability of the life-sustaining, critical
infrastructure of the electric grid supporting the communities we
serve. Our coal operations demonstrated their flexibility and
resiliency by adjusting production in response to rapidly changing
circumstances, all while implementing enhanced health and safety
protocols designed to mitigate the impact of the virus. Despite the
disruptions encountered during the year, through their decisive
actions our coal mining operations delivered the best safety
results in ARLP’s history.”
Mr. Craft added, “Throughout the year, the entire Alliance
organization remained laser-focused on protecting our financial
position and liquidity by optimizing cash flow, reducing debt and
working capital and controlling capital expenditures and expenses,
which yielded impressive results. During 2020, ARLP –
- Reduced capital expenditures by 60.4% or $184.8 million
- Reduced operating expenses by 27.2% or $322.4 million
- Reduced G&A expense by 18.1% or $13.2 million
- Reduced total debt and finance lease obligations by 24.9% or
$197.1 million
- Reduced working capital by 23.0% or $31.6 million
- Generated $279.5 million of free cash flow, an increase of
33.7%
- Increased liquidity by 80.7% or $219.9 million
The sacrifices and tireless efforts of our employees kept ARLP
strong during the uncertainties of 2020 and have us well positioned
entering 2021.” (For a definition of free cash flow and related
reconciliation to the comparable GAAP financial measure, please see
the end of this release.)
Financial and Liquidity Update
Our ongoing efforts to optimize cash flows, reduce working
capital requirements and strictly control capital expenditures and
expenses continue to yield positive benefits. During the 2020
Quarter, ARLP generated free cash flow of $90.6 million, reduced
debt and finance lease obligations by $67.8 million and increased
liquidity by $70.2 million. We ended 2020 with total leverage of
1.53 times, a 9.5% improvement from the Sequential Quarter, keeping
ARLP comfortably in compliance with all debt covenants, including
its total leverage covenant of 2.5 times.
As previously announced, the Board of Directors of ARLP's
general partner (the “Board") suspended the cash distribution to
unitholders for the 2020 Quarter. The Board intends to reassess its
distribution policy at its meeting following the quarter ending
March 31, 2021. Future unitholder distributions will be subject to
ongoing board review of a number of factors including business and
market conditions, ARLP’s future financial and operating
performance outlook and other capital allocation priorities.
Operating Results and Analysis
% Change
2020 Fourth
2019 Fourth
Quarter /
2020 Third
% Change
(in millions, except per ton and per
BOE data)
Quarter
Quarter
Quarter
Quarter
Sequential
Coal
Operations
Illinois
Basin
Tons sold
5.488
6.687
(17.9)
%
5.219
5.2
%
Coal sales price per ton (1)
$
39.28
$
37.84
3.8
%
$
39.54
(0.7)
%
Segment Adjusted EBITDA Expense per ton
(2)
$
24.93
$
26.46
(5.8)
%
$
23.95
4.1
%
Segment Adjusted EBITDA (2)
$
79.1
$
78.6
0.6
%
$
81.6
(3.1)
%
Appalachia
Tons sold
2.585
2.745
(5.8)
%
2.483
4.1
%
Coal sales price per ton (1)
$
50.29
$
54.89
(8.4)
%
$
52.12
(3.5)
%
Segment Adjusted EBITDA Expense per ton
(2)
$
30.80
$
40.35
(23.7)
%
$
34.82
(11.5)
%
Segment Adjusted EBITDA (2)
$
50.9
$
48.3
5.2
%
$
43.4
17.3
%
Total
Coal
Tons sold
8.073
9.432
(14.4)
%
7.702
4.8
%
Coal sales price per ton (1)
$
42.81
$
42.95
(0.3)
%
$
43.59
(1.8)
%
Segment Adjusted EBITDA Expense per ton
(2)
$
27.38
$
30.92
(11.4)
%
$
28.03
(2.3)
%
Segment Adjusted EBITDA (2)
$
129.8
$
129.4
0.3
%
$
123.8
4.8
%
Minerals
(3)
Volume - BOE
0.418
0.498
(16.1)
%
0.468
(10.7)
%
Volume - oil percentage of BOE
48.5
%
45.2
%
7.3
%
49.4
%
(1.8)
%
Average sales price per BOE (3)
$
26.83
$
31.11
(13.8)
%
$
20.71
29.6
%
Segment Adjusted EBITDA Expense (2)
$
1.26
$
1.70
(26.3)
%
$
0.85
47.8
%
Segment Adjusted EBITDA (2)
$
10.2
$
14.6
(29.7)
%
$
8.9
15.1
%
Consolidated
Total (4)
Total revenues
$
366.5
$
453.3
(19.2)
%
$
355.7
3.1
%
Segment Adjusted EBITDA Expense (2)
$
222.3
$
293.4
(24.2)
%
$
216.8
2.5
%
Segment Adjusted EBITDA (2)
$
140.0
$
143.9
(2.7)
%
$
132.7
5.5
%
____________________
(1)
Coal sales price per ton is defined as
total coal sales divided by total tons sold.
(2)
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 (as reflected in the
reconciliation table at the end of this release) divided by total
tons sold.
(3)
Average sales price per BOE is defined as
royalty revenues excluding lease bonus revenue divided by total
barrels of oil equivalent ("BOE"). BOE for natural gas volumes is
calculated on a 6:1 basis (6,000 cubic feet of natural gas to one
barrel).
(4)
Total reflects consolidated results, which
include our other and corporate category and eliminations in
addition to the Illinois Basin, Appalachia and Minerals segments
highlighted above.
ARLP’s coal sales volumes increased in both the Illinois Basin
and Appalachian regions compared to the Sequential Quarter, leading
total coal sales volumes in the 2020 Quarter higher by 4.8% to 8.1
million tons. Illinois Basin coal sales volumes increased 5.2% on
higher volumes at our Hamilton and Warrior mines compared to the
Sequential Quarter. In Appalachia, coal sales volumes increased
4.1% compared to the Sequential Quarter primarily due to higher
sales from our MC Mining operation which completed development of
its new mine mid-way through the Sequential Quarter. Compared to
the 2019 Quarter, total coal sales volumes decreased 14.4% in the
2020 Quarter primarily due to the impacts of the COVID-19 pandemic
and reduced export shipments. ARLP’s focus on reducing coal
inventories and matching production to meet customer requirements
resulted in total coal inventory falling to 0.6 million tons at the
end of the 2020 Quarter, compared to 1.8 million tons and 1.2
million tons at the end of the 2019 and Sequential Quarters,
respectively.
Total coal sales price per ton in the 2020 Quarter fell 1.8%
compared to the Sequential Quarter due to a 3.5% reduction in
Appalachia as a result of lower price realizations at our Tunnel
Ridge operation. Total coal sales price per ton was relatively
unchanged in the 2020 Quarter compared to the 2019 Quarter. In the
Illinois Basin, coal sales price per ton in the 2020 Quarter
increased by 3.8% compared to the 2019 Quarter due to improved
price realizations at our Hamilton mine. In Appalachia, price
realizations decreased by 8.4% compared to the 2019 Quarter
primarily due to weak market conditions and the absence of
high-priced metallurgical sales volumes in the 2020 Quarter.
Ongoing expense control initiatives at all operations drove
total Segment Adjusted EBITDA Expense per ton in the 2020 Quarter
lower compared to both the Sequential and 2019 Quarters, falling by
2.3% and 11.4%, respectively. In Appalachia, Segment Adjusted
EBITDA Expense per ton decreased 11.5% compared to the Sequential
Quarter due to higher production volumes from our Tunnel Ridge
mine, reduced longwall move days and increased recoveries from our
MC Mining operation in the 2020 Quarter offset in part by higher
inventory cost in the 2020 Quarter. Segment Adjusted EBITDA Expense
per ton in the Illinois Basin increased 4.1% compared to the
Sequential Quarter as a result of reduced production volumes in the
2020 Quarter reflecting seasonal differences. Compared to the 2019
Quarter, reduced expenses per ton in both the Illinois Basin and
Appalachian regions drove total Segment Adjusted EBITDA Expense per
ton lower by 11.4% in the 2020 Quarter. In the Illinois Basin,
Segment Adjusted EBITDA Expense per ton decreased 5.8% compared to
the 2019 Quarter primarily as a result of reduced maintenance
expenses per ton, favorable inventory costs, lower materials and
supplies expenses per ton, improved recoveries at several mines and
the absence of higher cost Gibson North sales in the 2020 Quarter,
partially offset by reduced total coal production volumes from the
region and higher excise and severance taxes. In Appalachia,
Segment Adjusted EBITDA Expense per ton decreased 23.7% compared to
the 2019 Quarter as a result of strong production at our Tunnel
Ridge mine, lower maintenance expenses across the region, reduced
materials and supplies expenses per ton, lower labor and benefit
expenses and the absence of higher cost purchased tons sold.
Continued strengthening of oil & gas prices during the 2020
Quarter led Segment Adjusted EBITDA for our Minerals segment higher
by 15.1% to $10.2 million compared to the Sequential Quarter.
Compared to the 2019 Quarter, Segment Adjusted EBITDA declined by
29.7% due to lower sales price realizations per BOE and reduced
volumes amid the COVID-19 pandemic.
Outlook
“Entering 2021, we are encouraged by hopes for gradually
improving economic recovery as the roll out of vaccines continues,”
said Mr. Craft. “Increased economic activity in the U.S. is
expected to result in improved energy demand and both our coal and
minerals segments should benefit if this occurs. Increased power
generation and a favorable natural gas price curve has coal
consumption poised for a potential rebound. As global economies
gradually continue to recover, international coal market conditions
are also beginning to improve which could create additional
opportunities for U.S. producers. As we mentioned last quarter,
several domestic utilities were recently in the market seeking
significant coal supply commitments for multi-year terms. Our
marketing team successfully booked commitments for the delivery of
approximately 9.9 million tons through 2025. ARLP currently has
contract commitments for approximately 24.1 million tons in 2021
and we are continuing to target total coal sales volumes this year
approximately 10.0% above 2020 levels.”
Mr. Craft continued, “Higher commodity prices have led to
increased permitting, drilling and completion activity across the
regions where our oil & gas minerals are located. It will take
time, however, for production from new development to overcome the
aggregate decline curve on ARLP’s existing mineral interests
created by the dramatic reduction in drilling and completion rates
experienced last year. Assuming recent strength in oil, natural gas
and natural gas liquids pricing is sustained, we currently expect
higher year-over-year price realizations in 2021 and a modest
increase in the EBITDA contribution from our Minerals segment this
year.”
In conclusion, Mr. Craft said, “Creating long-term unitholder
value is core to ARLP’s business objectives. A balanced approach to
maximize cash flows from existing assets, pursue external growth
opportunities, protect our balance sheet and return cash to
unitholders are all key to achieving our objective. ARLP is
actively evaluating various strategies which we believe have the
potential to generate attractive long-term returns and sustainable
cash flow growth and we look forward to sharing more details as our
plans continue to develop over the next few quarters.”
ARLP is providing the following initial guidance for selected
items in 2021:
2021 Full Year
Guidance
Coal
Volumes (Million
Short Tons)
Illinois Basin Sales Tons
20.5 — 21.0
Appalachia Sales Tons
9.7 — 10.2
Total Sales Tons
30.2 — 31.2
Committed & Priced Sales Tons
2021 — Domestic
22.7
2021 — Export
1.4
Per Ton
Estimates
Coal Sales Price per ton sold (1)
~ $40.00 — $42.00
Segment Adjusted EBITDA Expense per ton
sold (2)
~ $27.50 — $30.00
Minerals
Oil (000 Barrels)
625 — 710
Natural gas (000 MCF)
2,630 — 2,980
Liquids (000 Barrels)
285 — 325
Segment Adjusted EBITDA Expense (% of
Minerals Revenue)
~ 12.5%
Consolidated (Millions)
Depreciation, depletion and
amortization
$260 — $270
General and administrative - Cash
$50 — $52
General and administrative – Non-cash
$16 — $18
Net interest expense
$42 — $44
Capital expenditures
$120 — $125
____________________
(1)
Sales price per ton is defined as total
coal sales divided by total tons sold.
(2)
For a definition of Segment Adjusted
EBITDA Expense and related reconciliation to the comparable GAAP
financial measure please see the end of this release.
A conference call regarding ARLP's 2020 Quarter and Year
financial results and 2021 outlook is scheduled for today at 10:00
a.m. Eastern. To participate in the conference call, dial (877)
506-1589 and request to be connected to the Alliance Resource
Partners, L.P. earnings conference call. Canadian callers should
dial (855) 669-9657 and all other international callers should dial
(412) 317-5240 and request to be connected to the same call.
Investors may also listen to the call via the "investor
information" 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 US Toll
Free (877) 344-7529; International Toll (412) 317-0088; Canada Toll
Free (855) 669-9658 and request to be connected to replay access
code 10151585.
About Alliance Resource Partners, L.P.
ARLP is a diversified natural resource company that generates
income from coal production and oil & gas mineral interests
located in strategic producing regions across the United
States.
ARLP operates seven coal mining complexes in Illinois, Indiana,
Kentucky, Maryland and West Virginia. ARLP also operates a coal
loading terminal on the Ohio River at Mount Vernon, Indiana. ARLP
markets its coal production to major domestic and international
utilities and industrial users and is currently the second largest
coal producer in the eastern United States.
ARLP generates royalty income from mineral interests it owns in
premier oil & gas producing regions in the United States,
primarily the Permian, Anadarko and Williston basins.
In addition, ARLP also generates income from a variety of other
sources.
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 coal and oil & gas consumption and expected future
prices, 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
impact of COVID-19 both to the execution of our day to day
operations including potential closures, as well as to the
pandemic's broader impact on demand for coal, oil and natural gas,
the financial condition of our customers and suppliers, available
liquidity and credit sources and broader economic disruption that
is evolving. In addition, the actions of the major oil producing
countries with respect to oil production and prices may have direct
and indirect impacts over the near and long term to our Minerals
segment. These risks compound the ongoing risks to our business,
including 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; changing global economic
conditions or in industries in which our customers operate; changes
in coal prices and/or oil & gas prices, demand and availability
which could affect our operating results and cash flows; 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 lack of downstream demand or storage capacity;
risks associated with the expansion of our operations and
properties; our ability to identify and complete acquisitions;
dependence on significant customer contracts, including renewing
existing contracts upon expiration; adjustments made in price,
volume, or terms to existing coal supply agreements; recent action
and the possibility of future action on trade made by United States
and foreign governments; the effect of new tariffs and other trade
measures; 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; 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 raw material costs; changes in the availability of
skilled 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-related 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 reserves;
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; 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,
2019, filed on February 20, 2020 and ARLP's Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and
September 30, 2020, filed on May 8, 2020, August 6, 2020 and
November 5, 2020, respectively, with the SEC. 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 OPERATIONS AND OPERATING DATA
(In thousands, except unit and
per unit data)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2020
2019
2020
2019
Tons Sold
8,073
9,432
28,212
39,289
Tons Produced
7,444
8,551
26,990
39,981
Mineral Interest Volumes (BOE)
418
498
1,792
1,611
SALES AND OPERATING REVENUES:
Coal sales
$
345,582
$
405,111
$
1,232,272
$
1,762,442
Oil & gas royalties
11,194
15,481
42,912
51,735
Transportation revenues
4,407
16,611
21,129
99,503
Other revenues
5,330
16,135
31,816
48,040
Total revenues
366,513
453,338
1,328,129
1,961,720
EXPENSES:
Operating expenses (excluding
depreciation, depletion and amortization)
222,123
286,845
859,656
1,182,100
Transportation expenses
4,407
16,611
21,129
99,503
Outside coal purchases
—
7,447
—
23,357
General and administrative
18,675
17,779
59,806
72,997
Depreciation, depletion and
amortization
75,725
88,675
313,387
309,075
Asset impairments
—
—
24,977
15,190
Goodwill impairment
—
—
132,026
—
Total operating expenses
320,930
417,357
1,410,981
1,702,222
INCOME (LOSS) FROM OPERATIONS
45,583
35,981
(82,852
)
259,498
Interest expense, net
(10,702
)
(12,044
)
(45,613
)
(45,875
)
Interest income
23
58
135
379
Equity method investment income
257
670
907
2,203
Equity securities income
—
—
—
12,906
Acquisition gain
—
—
—
177,043
Other income (expense)
(137
)
931
(1,593
)
561
INCOME (LOSS) BEFORE INCOME
TAXES
35,024
25,596
(129,016
)
406,715
INCOME TAX EXPENSE (BENEFIT)
(76
)
(341
)
35
(211
)
NET INCOME (LOSS)
35,100
25,937
(129,051
)
406,926
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST
(72
)
(105
)
(169
)
(7,512
)
NET INCOME (LOSS) ATTRIBUTABLE TO
ARLP
$
35,028
$
25,832
$
(129,220
)
$
399,414
EARNINGS PER LIMITED PARTNER UNIT -
BASIC AND DILUTED
$
0.27
$
0.20
$
(1.02
)
$
3.07
WEIGHTED-AVERAGE NUMBER OF UNITS
OUTSTANDING – BASIC AND DILUTED
127,195,219
127,538,211
127,164,659
128,116,670
ALLIANCE RESOURCE PARTNERS,
L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except unit
data)
(Unaudited)
December 31,
2020
2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
55,574
$
36,482
Trade receivables
104,579
161,679
Other receivables
3,481
256
Inventories, net
56,407
101,305
Advance royalties
4,168
1,844
Prepaid expenses and other assets
21,565
18,019
Total current assets
245,774
319,585
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost
3,554,090
3,684,008
Less accumulated depreciation, depletion
and amortization
(1,753,845
)
(1,675,022
)
Total property, plant and equipment,
net
1,800,245
2,008,986
OTHER ASSETS:
Advance royalties
56,791
52,057
Equity method investments
27,268
28,529
Goodwill
4,373
136,399
Operating lease right-of-use assets
15,004
17,660
Other long-term assets
16,561
23,478
Total other assets
119,997
258,123
TOTAL ASSETS
$
2,166,016
$
2,586,694
LIABILITIES AND PARTNERS'
CAPITAL
CURRENT LIABILITIES:
Accounts payable
$
47,511
$
80,566
Accrued taxes other than income taxes
25,054
15,768
Accrued payroll and related expenses
28,524
36,575
Accrued interest
5,132
5,664
Workers' compensation and pneumoconiosis
benefits
10,646
11,175
Current finance lease obligations
766
8,368
Current operating lease obligations
1,854
3,251
Other current liabilities
21,919
21,062
Current maturities, long-term debt,
net
73,199
13,157
Total current liabilities
214,605
195,586
LONG-TERM LIABILITIES:
Long-term debt, excluding current
maturities, net
519,421
768,194
Pneumoconiosis benefits
105,068
94,389
Accrued pension benefit
46,965
44,858
Workers' compensation
47,521
45,503
Asset retirement obligations
121,487
133,018
Long-term finance lease obligations
1,458
2,224
Long-term operating lease obligations
13,078
14,316
Other liabilities
24,146
23,182
Total long-term liabilities
879,144
1,125,684
Total liabilities
1,093,749
1,321,270
PARTNERS' CAPITAL:
ARLP Partners' Capital:
Limited Partners - Common Unitholders
127,195,219 and 126,915,597 units outstanding, respectively
1,148,565
1,331,482
Accumulated other comprehensive loss
(87,674
)
(77,993
)
Total ARLP Partners' Capital
1,060,891
1,253,489
Noncontrolling interest
11,376
11,935
Total Partners' Capital
1,072,267
1,265,424
TOTAL LIABILITIES AND PARTNERS'
CAPITAL
$
2,166,016
$
2,586,694
ALLIANCE RESOURCE PARTNERS,
L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Year Ended
December 31,
2020
2019
CASH FLOWS FROM OPERATING
ACTIVITIES:
$
400,645
$
514,895
CASH FLOWS FROM INVESTING
ACTIVITIES:
Property, plant and equipment:
Capital expenditures
(121,101
)
(305,858
)
Decrease in accounts payable and accrued
liabilities
(8,773
)
(81
)
Proceeds from sale of property, plant and
equipment
3,762
1,266
Distributions received from investments in
excess of cumulative earnings
988
2,501
Payments for acquisitions of businesses,
net of cash acquired
—
(320,232
)
Cash received from redemption of equity
securities
—
134,288
Net cash used in investing activities
(125,124
)
(488,116
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings under securitization
facility
46,100
184,500
Payments under securitization facility
(64,000
)
(202,700
)
Proceeds from equipment financings
14,705
63,086
Payments on equipment financings
(14,805
)
(2,607
)
Borrowings under revolving credit
facilities
70,000
400,000
Payments under revolving credit
facilities
(237,500
)
(320,000
)
Payments on finance lease obligations
(8,368
)
(46,725
)
Payment of debt issuance costs
(6,280
)
—
Payments for purchases of units under unit
repurchase program
—
(22,892
)
Payments for taxes related to net
settlement of issuance of units in deferred compensation plans
(1,310
)
(7,817
)
Cash settlement of grants under deferred
compensation plan
(2,490
)
—
Distributions paid to Partners
(51,753
)
(278,425
)
Other
(728
)
(867
)
Net cash used in financing activities
(256,429
)
(234,447
)
NET CHANGE IN CASH AND CASH
EQUIVALENTS
19,092
(207,668
)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD
36,482
244,150
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
$
55,574
$
36,482
Reconciliation of GAAP "net income (loss)
attributable to ARLP" to non-GAAP "Adjusted net income attributable
to ARLP" (in thousands).
Adjusted net income attributable to ARLP is defined as net
income (loss) attributable to ARLP modified for certain items that
may not reflect the trend of future results, such as asset and
goodwill impairments and acquisition gains.
Adjusted net income attributable to ARLP should not be
considered as an alternative to net income (loss) attributable to
ARLP or any other measure of financial performance presented in
accordance with GAAP. Adjusted net income attributable to ARLP
excludes certain items that management believes affect the
comparability of our operating results. This adjusted financial
measure is used by our management and external users of our
financial statements, such as investors, commercial banks, research
analysts and others, to assess:
- our operational trends and performance relative to other coal
and mineral companies;
- the comparability of our performance to earnings estimates
provided by security analysts; and
- our performance excluding items which are generally
nonrecurring in nature or whose timing or amount cannot be
reasonably estimated.
We believe Adjusted net income attributable to ARLP is a useful
measure for investors because it further demonstrates our financial
performance without regard to items that may not reflect the trend
of future results.
Three Months Ended
Year Ended
Three Months Ended
December 31,
December 31,
September 30,
2020
2019
2020
2019
2020
Net income (loss) attributable to ARLP
$
35,028
$
25,832
$
(129,220
)
$
399,414
$
27,199
Asset impairments
—
—
24,977
15,190
—
Goodwill impairment
—
—
132,026
—
—
Acquisition gain
—
—
—
(177,043
)
—
Acquisition gain attributable to
noncontrolling interest
—
—
—
7,083
—
Adjusted net income attributable to
ARLP
$
35,028
$
25,832
$
27,783
$
244,644
$
27,199
Reconciliation of GAAP "net income (loss)
attributable to ARLP" to non-GAAP "EBITDA," "Adjusted EBITDA" and
"Distributable Cash Flow" (in thousands).
EBITDA is defined as net income (loss) attributable to ARLP
before net interest expense, income taxes and depreciation,
depletion and amortization and Adjusted EBITDA is EBITDA modified
for certain items that may not reflect the trend of future results,
such as asset and goodwill impairments and acquisition gains.
Distributable cash flow ("DCF") is defined as Adjusted 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, Adjusted EBITDA, DCF and DCR should not be considered as
alternatives to net income (loss) attributable to ARLP, net income
(loss), income (loss) from operations, cash flows from operating
activities or any other measure of financial performance presented
in accordance with GAAP. EBITDA, Adjusted 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,
Adjusted EBITDA, DCF and DCR may not be the same method used to
compute similar measures reported by other companies, or EBITDA,
Adjusted 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,
2020
2019
2020
2019
2020
Net income (loss) attributable to ARLP
$
35,028
$
25,832
$
(129,220
)
$
399,414
$
27,199
Depreciation, depletion and
amortization
75,725
88,675
313,387
309,075
80,182
Interest expense, net
10,739
12,407
46,803
46,707
11,355
Capitalized interest
(60
)
(421
)
(1,325
)
(1,211
)
(199
)
Income tax expense (benefit)
(76
)
(341
)
35
(211
)
293
EBITDA
121,356
126,152
229,680
753,774
118,830
Asset impairments
—
—
24,977
15,190
—
Goodwill impairment
—
—
132,026
—
—
Acquisition gain
—
—
—
(177,043
)
—
Acquisition gain attributable to
noncontrolling interest
—
—
—
7,083
—
Adjusted EBITDA
121,356
126,152
386,683
599,004
118,830
Interest expense, net
(10,739
)
(12,407
)
(46,803
)
(46,707
)
(11,355
)
Income tax (expense) benefit
76
341
(35
)
211
(293
)
Estimated maintenance capital expenditures
(1)
(36,177
)
(47,629
)
(131,171
)
(222,694
)
(35,002
)
Distributable Cash Flow
$
74,516
$
66,457
$
208,674
$
329,814
$
72,180
Distributions paid to partners
$
—
$
69,772
$
51,753
$
278,425
$
—
Distribution Coverage Ratio
—
0.95
4.03
1.18
—
____________________
(1)
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 2020, maintenance capital expenditures were
estimated to be $4.86 per ton produced. Our actual maintenance
capital expenditures fluctuate depending on various factors,
including maintenance schedules and timing of capital projects,
among others. We annually disclose actual maintenance capital
expenditures in our Form 10-K filed with the SEC.
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. 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,
2020
2019
2020
2019
2020
Cash flows from operating activities
$
108,857
$
106,477
$
400,645
$
514,895
$
121,620
Capital expenditures
(18,281
)
(64,716
)
(121,101
)
(305,858
)
(18,575
)
Free cash flow
$
90,576
$
41,761
$
279,544
$
209,037
$
103,045
Reconciliation of GAAP "Operating
Expenses" to non-GAAP "Segment Adjusted EBITDA Expense" and
Reconciliation of non-GAAP "Adjusted EBITDA" to "Segment Adjusted
EBITDA" (in thousands).
Segment Adjusted EBITDA Expense includes operating expenses,
coal purchases and other expense. Segment Adjusted EBITDA Expense –
Coal excludes expenses of our Minerals segment. 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 and Adjusted 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.
Three Months Ended
Year Ended
Three Months Ended
December 31,
December 31,
September 30,
2020
2019
2020
2019
2020
Operating expense
$
222,123
$
286,845
$
859,656
$
1,182,100
$
216,027
Outside coal purchases
—
7,447
—
23,357
—
Other expense (income)
137
(931
)
1,593
(561
)
723
Segment Adjusted EBITDA Expense
222,260
293,361
861,249
1,204,896
216,750
Minerals expenses
(1,255
)
(1,702
)
(4,106
)
(7,811
)
(849
)
Segment Adjusted EBITDA Expense - Coal
$
221,005
$
291,659
$
857,143
$
1,197,085
$
215,901
Divided by tons sold
8,073
9,432
28,212
39,289
7,702
Segment Adjusted EBITDA Expense per
ton
$
27.38
$
30.92
$
30.38
$
30.47
$
28.03
Segment Adjusted EBITDA is defined as net income (loss)
attributable to ARLP before net interest expense, income taxes,
depreciation, depletion and amortization, general and
administrative expenses, asset and goodwill impairments and
acquisition gain. Segment Adjusted EBITDA – Coal excludes the
contribution of our Minerals segment and equity securities income
to allow management to focus solely on the operating performance of
our coal segments.
Three Months Ended
Year Ended
Three Months Ended
December 31,
December 31,
September 30,
2020
2019
2020
2019
2020
Adjusted EBITDA (See reconciliation to
GAAP above)
$
121,356
$
126,152
$
386,683
$
599,004
$
118,830
General and administrative
18,675
17,779
59,806
72,997
13,871
Segment Adjusted EBITDA
140,031
143,931
446,489
672,001
132,701
Minerals segment
(10,239
)
(14,565
)
(39,773
)
(46,997
)
(8,898
)
Equity securities income
—
—
—
(12,906
)
—
Segment Adjusted EBITDA – Coal
$
129,792
$
129,366
$
406,716
$
612,098
$
123,803
Divided by tons sold
8,073
9,432
28,212
39,289
7,702
Segment Adjusted EBITDA per ton
$
16.08
$
13.72
$
14.42
$
15.58
$
16.07
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210201005147/en/
Brian L. Cantrell Alliance Resource Partners, L.P. (918)
295-7673
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