Highlights
- Record full year 2023 total revenue of $2.6 billion, coal sales
price realizations of $64.17 per ton sold, and net income of $630.1
million
- Full year 2023 EBITDA of $933.1 million
- Fourth quarter 2023 total revenue of $625.4 million, EBITDA of
$185.4 million, and net income of $115.4 million
- Completed $24.8 million in oil & gas mineral interest
acquisitions during fourth quarter 2023 and $110.9 million during
full year 2023, resulting in record BOE volumes
- Reduced debt by $22.9 million during fourth quarter 2023 and
$85.0 million during full year 2023, resulting in total and net
leverage ratios of 0.37 times and 0.31 times, respectively
- In January 2024, declared quarterly cash distribution of $0.70
per unit, or $2.80 per unit annualized
- 2024 expected coal sales volumes over 90% committed and priced
at levels similar to 2023
Alliance Resource Partners, L.P. (NASDAQ: ARLP) ("ARLP" or the
"Partnership") today reported financial and operating results for
the quarter and full year ended December 31, 2023 (the "2023
Quarter" and "2023 Full Year"). This release includes comparisons
of results to the quarter and year ended December 31, 2022 (the
"2022 Quarter" and "2022 Full Year", respectively), as well as the
quarter ended September 30, 2023 (the "Sequential Quarter"). 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.
2023 Full Year performance saw total revenues increase $146.7
million to a record $2.6 billion primarily due to higher coal sales
revenues. Coal sales prices and coal sales revenues during the 2023
Full Year were higher by 8.6% and 5.1%, respectively, compared to
the 2022 Full Year. Increased revenues and lower income tax expense
were partially offset by higher total operating expenses in the
2023 Full Year, resulting in record net income of $630.1 million,
or $4.81 per basic and diluted limited partner unit, for the 2023
Full Year, compared to $586.2 million, or $4.39 per basic and
diluted limited partner unit, for the 2022 Full Year, a 7.5%
increase.
Total revenues in the 2023 Quarter decreased to $625.4 million
compared to $704.2 million for the 2022 Quarter primarily as a
result of lower coal and oil & gas prices and reduced coal
sales volumes, partially offset by record oil & gas royalty
volumes and higher transportation and other revenues. Lower
revenues and higher total operating expenses reduced net income for
the 2023 Quarter to $115.4 million, or $0.88 per basic and diluted
limited partner unit, compared to $216.9 million, or $1.63 per
basic and diluted limited partner unit, for the 2022 Quarter.
EBITDA for the 2023 Quarter was $185.4 million compared to $296.9
million in the 2022 Quarter.
Compared to the Sequential Quarter, total revenues in the 2023
Quarter decreased 1.7% primarily as a result of lower average coal
sales prices of $60.60 per ton sold compared to $64.94 per ton sold
in the Sequential Quarter, partially offset by higher coal sales
volumes, which increased 1.9% to 8.6 million tons sold in the 2023
Quarter. Lower revenues and higher total operating expenses
contributed to a reduction in net income and EBITDA of 24.9% and
18.5%, respectively, compared to the Sequential Quarter.
CEO Commentary
"For the 2023 Full Year, we once again delivered record revenues
and net income, relying upon the strength of our well-contracted
coal order book and the resilience of the entire ARLP team who
persevered through volatile market challenges and difficult mining
conditions," commented Joseph W. Craft III, Chairman, President and
Chief Executive Officer. "Our strategic relationships with our
long-standing customers were evident in the 2023 Quarter as we
contracted an additional 12.0 million tons for domestic deliveries
over the 2024 through 2028 time period at attractive, escalating
prices, bringing our committed and priced order book for 2024 to
over 90% of expected shipments."
Mr. Craft added, "We believe the worst of the adverse geological
conditions, which delayed development of a new district at Mettiki,
idling the longwall there for essentially the entire second half of
the 2023 Full Year, are behind us. With the longwall at Mettiki
resuming production in late December 2023, we are expecting
production in the first quarter of 2024, for our Appalachia
operations, to compare favorably to the first quarter of 2023."
Mr. Craft concluded, "Our Oil & Gas Royalty business
completed $24.8 million in oil & gas mineral interest
acquisitions during the 2023 Quarter and $110.9 million for the
2023 Full Year, resulting in record BOE volumes. We plan to
continue allocating capital to grow this business line in 2024.
Combining the stability of our heavily contracted coal order book
with continued growth in our Oil & Gas Royalty business, we are
well-positioned for another record year of revenues in 2024."
Segment Results and Analysis
% Change
2023 Fourth
2022 Fourth
Quarter /
2023 Third
% Change
(in millions, except per ton and per
BOE data)
Quarter
Quarter
Quarter
Quarter
Sequential
Coal Operations
(1)
Illinois Basin
Coal Operations
Tons sold
6.419
6.288
2.1
%
6.049
6.1
%
Coal sales price per ton sold
$
55.06
$
57.47
(4.2
)%
$
56.66
(2.8
)%
Segment Adjusted EBITDA Expense per
ton
$
35.26
$
37.98
(7.2
)%
$
35.25
—
%
Segment Adjusted EBITDA
$
130.1
$
124.4
4.6
%
$
132.4
(1.7
)%
Appalachia Coal
Operations
Tons sold
2.194
3.021
(27.4
)%
2.407
(8.8
)%
Coal sales price per ton sold
$
76.82
$
89.41
(14.1
)%
$
85.74
(10.4
)%
Segment Adjusted EBITDA Expense per
ton
$
63.52
$
42.46
49.6
%
$
54.84
15.8
%
Segment Adjusted EBITDA
$
29.8
$
148.9
(80.0
)%
$
74.8
(60.2
)%
Total Coal
Operations
Tons sold
8.613
9.309
(7.5
)%
8.456
1.9
%
Coal sales price per ton sold
$
60.60
$
67.84
(10.7
)%
$
64.94
(6.7
)%
Segment Adjusted EBITDA Expense per
ton
$
42.91
$
39.75
7.9
%
$
41.19
4.2
%
Segment Adjusted EBITDA
$
156.2
$
270.5
(42.3
)%
$
204.3
(23.6
)%
Royalties
(1)
Oil & Gas
Royalties (4)
BOE sold (2)
0.809
0.715
13.1
%
0.772
4.8
%
Oil percentage of BOE
46.3
%
44.9
%
3.1
%
43.9
%
5.5
%
Average sales price per BOE (3)
$
44.60
$
55.53
(19.7
)%
$
44.19
0.9
%
Segment Adjusted EBITDA Expense
$
4.7
$
4.6
1.4
%
$
3.9
20.7
%
Segment Adjusted EBITDA
$
31.0
$
35.3
(12.0
)%
$
31.4
(1.0
)%
Coal
Royalties
Royalty tons sold
5.018
5.305
(5.4
)%
4.993
0.5
%
Revenue per royalty ton sold
$
3.33
$
2.68
24.3
%
$
3.36
(0.9
)%
Segment Adjusted EBITDA Expense
$
6.6
$
6.1
8.3
%
$
6.9
(3.4
)%
Segment Adjusted EBITDA
$
10.2
$
8.2
24.3
%
$
9.9
2.5
%
Total Royalties
(4)
Total royalty revenues
$
53.0
$
54.1
(1.9
)%
$
53.1
(0.1
)%
Segment Adjusted EBITDA Expense
$
11.3
$
10.7
5.3
%
$
10.7
5.3
%
Segment Adjusted EBITDA
$
41.2
$
43.4
(5.2
)%
$
41.3
(0.2
)%
Consolidated
Total (4)(5)
Total revenues
$
625.4
$
704.2
(11.2
)%
$
636.5
(1.7
)%
Segment Adjusted EBITDA Expense
$
376.6
$
375.5
0.3
%
$
350.4
7.5
%
Segment Adjusted EBITDA
$
203.2
$
314.9
(35.5
)%
$
247.7
(17.9
)%
_______________________
(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. Beginning in 2023, 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 for the 2022 Quarter 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)
The 2022 Quarter has been recast to
reflect the acquisition of 2,682 net oil and gas royalty acres in
the Permian Basin from JC Resources LP (the "JC Resources
Acquisition") as though we, rather than JC Resources LP, 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 declined in both regions
compared to the 2022 and Sequential Quarters. Lower export pricing
in the Illinois Basin reduced coal sales prices by 4.2% in the
region compared to the 2022 Quarter. Compared to the Sequential
Quarter, Illinois Basin coal sales prices were lower by 2.8% as a
result of reduced domestic price realizations. In Appalachia, coal
sales price per ton decreased by 14.1% and 10.4% compared to the
2022 and Sequential Quarters, respectively, as a result of lower
domestic pricing, partially offset by higher export price
realizations. Illinois Basin coal sales volumes increased by 2.1%
and 6.1% compared to the 2022 and Sequential Quarters,
respectively, as a result of increased volumes from our Hamilton
and Warrior mines compared to the 2022 Quarter and from our Gibson
South operation sequentially. Tons sold decreased in Appalachia
compared to the 2022 and Sequential Quarters due to reduced volumes
across the region, primarily caused by lower recoveries, fewer
operating units at MC Mining, the previously mentioned challenging
geologic conditions that delayed development of a new district at
our Mettiki longwall operation, customer plant maintenance and a
longwall move at our Tunnel Ridge mine during the 2023 Quarter.
ARLP ended the 2023 Quarter with total coal inventory of 1.3
million tons, representing an increase of 0.8 million tons compared
to the end of the 2022 Quarter and a decrease of 0.5 million tons
compared to the end of the Sequential Quarter. 2023 Quarter coal
inventory and tons sold were negatively impacted by approximately
0.6 million tons due to an unexpected temporary outage at a Gulf
Coast export terminal we use for export market sales.
Segment Adjusted EBITDA Expense per ton for the 2023 Quarter
decreased by 7.2% in the Illinois Basin compared to the 2022
Quarter, due primarily to increased volumes and lower expenses at
our Hamilton mine, that experienced an unexpected outage in the
2022 Quarter. Segment Adjusted EBITDA Expense per ton in Appalachia
increased compared to the 2022 and Sequential Quarters due
primarily to lower volumes as discussed above and purchased
coal.
Royalties
Segment Adjusted EBITDA for the Oil & Gas Royalties segment
decreased to $31.0 million in the 2023 Quarter compared to $35.3
million and $31.4 million in the 2022 and Sequential Quarters,
respectively. Compared to the 2022 Quarter, the decrease was due to
lower price realizations, partially offset by record oil & gas
volumes, which increased 13.1% to 809 MBOE sold in the 2023
Quarter. Higher volumes during the 2023 Quarter resulted from
increased drilling and completion activities on our interests and
acquisitions of additional oil & gas mineral interests.
Segment Adjusted EBITDA for the Coal Royalties segment increased
to $10.2 million for the 2023 Quarter compared to $8.2 million and
$9.9 million for the 2022 and Sequential Quarters, respectively.
Compared to the 2022 Quarter, the increase resulted from higher
average royalty rates per ton, partially offset by lower royalty
tons sold and increased selling expenses. Sequentially, the
increase in Segment Adjusted EBITDA for Coal Royalties primarily
resulted from lower selling expenses.
Balance Sheet and Liquidity
As of December 31, 2023, total debt and finance leases
outstanding were $348.1 million, including $284.6 million in ARLP’s
2025 senior notes. During the 2023 Quarter, ARLP reduced its total
debt and finance leases by $22.9 million. The Partnership’s total
and net leverage ratios were 0.37 times and 0.31 times,
respectively, as of December 31, 2023. ARLP ended the 2023 Quarter
with total liquidity of $492.1 million, which included $59.8
million of cash and cash equivalents and $432.3 million of
borrowings available under its revolving credit and accounts
receivable securitization facilities.
Distributions
On January 26, 2024, 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 February 14, 2024, to all unitholders of
record as of the close of trading on February 7, 2024. The
announced distribution is consistent with the cash distributions
for the 2022 and Sequential Quarters.
Acquisition of Oil & Gas Mineral Interests
In December 2023, ARLP closed on an acquisition of mineral
interests in approximately 2,372 oil & gas net royalty acres in
the Anadarko, Williston and Delaware Basins for a purchase price of
$14.5 million. During the 2023 Quarter, ARLP also separately
purchased approximately 864 net royalty acres in the Permian Basin
for $10.3 million.
Outlook
"As we look to 2024, our coal sales book is expected to be
equally as strong as last year and be the anchor to deliver another
record year of revenues," commented Mr. Craft. "Our dependability
and the reliability of our coal quality is highly valued by our
customers, evidenced by the premium pricing we have received,
relative to the spot market, on recent commitments with domestic
customers for multi-year contracts. We are entering 2024 with over
90% of our coal sales volumes committed and priced at similar
levels relative to 2023. We are expecting our production to be more
consistent in 2024, believing we have moved beyond the several
negative geological areas that we faced in 2023."
"We expect to complete the major infrastructure projects at
Tunnel Ridge, Hamilton, Warrior and the River View complex in
2024," Mr. Craft continued. "ARLP will start to recognize the
benefits from these strategic investments in 2025 as total capital
expenditures will be significantly lower and these mines will be
more productive, ensuring we maintain our position as one of the
most reliable, low-cost producers in the eastern United States over
the next decade. We are forecasting domestic natural gas prices to
rise in 2025 as new LNG terminal capacity comes online, driving an
increase in natural gas exports, benefitting both our Coal and
Royalties segments."
Mr. Craft added, "As we think about the outlook for the coal
industry and the markets we serve, we should all take notice that
grid planners have nearly doubled five-year load growth forecasts
in support of ongoing investments in U.S. industrial and
manufacturing sectors, as well as rising energy needs associated
with datacenters and artificial intelligence. While the speed of
electrifying the transportation sector may have slowed, the
enthusiasm for AI has accelerated."
Mr. Craft concluded, "We remain confident in our projections for
sustained coal demand for ARLP and the likelihood that the
pre-mature closures of coal-fired power plants in the eastern U.S.
will be delayed."
ARLP is providing the following updated guidance for the full
year ended December 31, 2024 (the "2024 Full Year"):
2024 Full Year
Guidance
Coal
Operations
Volumes (Million
Short Tons)
Illinois Basin Sales Tons
24.5 — 25.8
Appalachia Sales Tons
9.5 — 10.0
Total Sales Tons
34.0 — 35.8
Committed &
Priced Sales Tons
2024 — Domestic / Export / Total
28.4 / 4.1 / 32.5
2025 — Domestic / Export / Total
14.6 / 1.0 / 15.6
Coal Sales Price Per
Ton Sold (1)
Illinois Basin
$54.50 — $56.00
Appalachia
$80.50 — $83.50
Total
$61.75 — $63.75
Segment Adjusted
EBITDA Expense Per Ton Sold (2)
Illinois Basin
$35.25 — $37.25
Appalachia
$54.25 — $57.25
Total
$41.00 — $43.00
Royalties
Oil & Gas
Royalties
Oil (000 Barrels)
1,400 — 1,500
Natural gas (000 MCF)
5,600 — 6,000
Liquids (000 Barrels)
675 — 725
Segment Adjusted EBITDA Expense (% of Oil
& Gas Royalties Revenue)
~ 12.0%
Coal
Royalties
Royalty tons sold (Million Short Tons)
20.4 — 22.2
Revenue per royalty ton sold
$3.15 — $3.35
Segment Adjusted EBITDA Expense per
royalty ton sold
$1.15 — $1.25
Consolidated (Millions)
Depreciation, depletion and
amortization
$280 — $300
General and administrative
$80 — $85
Net interest expense
$20 — $25
Income tax expense
$17 — $19
Total capital expenditures
$450 — $500
Growth capital expenditures
$25 — $30
Maintenance capital expenditures
$425 — $470
(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.
Conference Call
A conference call regarding ARLP's 2023 Quarter and Full Year
financial results is scheduled for today at 10:00 a.m. Eastern. To
participate in the conference call, dial (877) 407-0784 and request
to be connected to the Alliance Resource Partners, L.P. earnings
conference call. International callers should dial (201) 689-8560
and request to be connected to the same call. Investors may also
listen to the call via the "Investors" 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 13743714.
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, the cost and perceived benefits of other
sources of electricity and fuels, such as oil & gas, nuclear
energy, and renewable fuels and the planned retirement of
coal-fired power plants in the U.S.; 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
and the Israel-Gaza conflict; the severity, magnitude and duration
of any future pandemics and impacts of such pandemics and of
businesses' and governments' responses to such pandemics 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; central
bank policy actions including interest rates, bank failures and
associated liquidity risks; 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, and ARLP's
Quarterly Reports on Form 10-Q for the quarters ended March 31,
2023, June 30, 2023 and September 30, 2023, filed on May 9, 2023,
August 8, 2023 and November 8, 2023, 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,
2023
2022*
2023
2022*
Tons Sold
8,613
9,309
34,442
35,589
Tons Produced
7,880
8,433
34,877
35,477
Mineral Interest Volumes (BOE)
809
715
3,105
2,405
SALES AND OPERATING REVENUES:
Coal sales
$
521,972
$
631,499
$
2,210,210
$
2,102,229
Oil & gas royalties
36,042
39,682
137,751
151,060
Transportation revenues
46,561
20,555
142,290
113,860
Other revenues
20,847
12,470
76,450
52,818
Total revenues
625,422
704,206
2,566,701
2,419,967
EXPENSES:
Operating expenses (excluding
depreciation, depletion and amortization)
356,563
378,515
1,368,787
1,288,082
Transportation expenses
46,561
20,555
142,290
113,860
Outside coal purchases
20,410
—
36,149
151
General and administrative
17,784
17,963
79,096
80,425
Depreciation, depletion and
amortization
68,400
74,171
267,982
276,670
Settlement gain
—
(6,664
)
—
(6,664
)
Total operating expenses
509,718
484,540
1,894,304
1,752,524
INCOME FROM OPERATIONS
115,704
219,666
672,397
667,443
Interest expense, net
(6,246
)
(9,027
)
(36,091
)
(37,331
)
Interest income
1,310
1,481
9,394
2,035
Equity method investment income (loss)
2,316
1,058
(1,468
)
5,634
Other income
391
3,016
218
4,355
INCOME BEFORE INCOME TAXES
113,475
216,194
644,450
642,136
INCOME TAX EXPENSE (BENEFIT)
(3,361
)
(1,668
)
8,280
53,978
NET INCOME
116,836
217,862
636,170
588,158
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST
(1,392
)
(981
)
(6,052
)
(1,958
)
NET INCOME ATTRIBUTABLE TO ARLP
$
115,444
$
216,881
$
630,118
$
586,200
NET INCOME ATTRIBUTABLE TO ARLP
GENERAL PARTNER
$
—
$
2,428
$
1,384
$
9,010
LIMITED PARTNERS
$
115,444
$
214,453
$
628,734
$
577,190
EARNINGS PER LIMITED PARTNER UNIT -
BASIC AND DILUTED
$
0.88
$
1.63
$
4.81
$
4.39
WEIGHTED-AVERAGE NUMBER OF UNITS
OUTSTANDING – BASIC AND DILUTED
127,125,437
127,195,219
127,180,312
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)
December 31,
2023
2022*
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
59,813
$
296,023
Trade receivables
282,622
241,412
Other receivables
9,678
8,601
Inventories, net
127,556
77,326
Advance royalties
7,780
7,556
Prepaid expenses and other assets
28,672
26,675
Total current assets
516,121
657,593
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost
4,172,544
3,931,422
Less accumulated depreciation, depletion
and amortization
(2,149,881
)
(2,050,754
)
Total property, plant and equipment,
net
2,022,663
1,880,668
OTHER ASSETS:
Advance royalties
71,125
67,713
Equity method investments
46,503
49,371
Equity securities
92,541
42,000
Operating lease right-of-use assets
16,569
14,950
Other long-term assets
22,904
15,726
Total other assets
249,642
189,760
TOTAL ASSETS
$
2,788,426
$
2,728,021
LIABILITIES AND PARTNERS'
CAPITAL
CURRENT LIABILITIES:
Accounts payable
$
108,269
$
95,122
Accrued taxes other than income taxes
21,007
22,967
Accrued payroll and related expenses
29,884
39,623
Accrued interest
3,558
5,000
Workers' compensation and pneumoconiosis
benefits
15,913
14,099
Other current liabilities
28,498
53,790
Current maturities, long-term debt,
net
20,338
24,970
Total current liabilities
227,467
255,571
LONG-TERM LIABILITIES:
Long-term debt, excluding current
maturities, net
316,821
397,203
Pneumoconiosis benefits
127,249
100,089
Accrued pension benefit
8,618
12,553
Workers' compensation
37,257
39,551
Asset retirement obligations
146,925
142,254
Long-term operating lease obligations
13,661
12,132
Deferred income tax liabilities
33,450
35,814
Other liabilities
18,381
24,828
Total long-term liabilities
702,362
764,424
Total liabilities
929,829
1,019,995
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
ARLP Partners' Capital:
Limited Partners - Common Unitholders
127,125,437 and 127,195,219 units outstanding, respectively
1,896,027
1,656,025
General Partner's interest
—
66,548
Accumulated other comprehensive loss
(61,525
)
(41,054
)
Total ARLP Partners' Capital
1,834,502
1,681,519
Noncontrolling interest
24,095
26,507
Total Partners' Capital
1,858,597
1,708,026
TOTAL LIABILITIES AND PARTNERS'
CAPITAL
$
2,788,426
$
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)
Year Ended
December 31,
2023
2022*
CASH FLOWS FROM OPERATING
ACTIVITIES:
$
830,642
$
802,349
CASH FLOWS FROM INVESTING
ACTIVITIES:
Property, plant and equipment:
Capital expenditures
(379,338
)
(286,394
)
Change in accounts payable and accrued
liabilities
(29,695
)
35,956
Proceeds from sale of property, plant and
equipment
3,710
7,468
Contributions to equity method
investments
(2,518
)
(24,087
)
Purchase of equity securities
(49,560
)
(42,000
)
JC Resources acquisition
(64,999
)
—
Oil & gas reserve business
combinations
(14,459
)
(92,618
)
Oil & gas reserve asset
acquisitions
(24,225
)
—
Other
1,351
(1,663
)
Net cash used in investing activities
(559,733
)
(403,338
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings under securitization
facility
—
27,500
Payments under securitization facility
—
(27,500
)
Payments on equipment financings
(24,970
)
(16,071
)
Borrowing under long-term debt
75,000
—
Payments on long-term debt
(129,455
)
—
Payment of debt issuance costs
(12,376
)
—
Payments for purchases of units under unit
repurchase program
(19,432
)
—
Payments for tax withholdings related to
settlements under deferred compensation plans
(10,334
)
—
Excess purchase price over the contributed
basis from JC Resources acquisition
(7,251
)
—
Cash retained by JC Resources in
acquisition
(2,933
)
(10,537
)
Distributions paid to Partners
(364,579
)
(196,347
)
Other
(10,789
)
(2,436
)
Net cash used in financing activities
(507,119
)
(225,391
)
NET CHANGE IN CASH AND CASH
EQUIVALENTS
(236,210
)
173,620
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD
296,023
122,403
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
$
59,813
$
296,023
* 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 equity method investment earnings, interest expense
(before capitalized interest), interest income, income taxes and
estimated maintenance capital expenditures and adding distributions
from equity method investments. 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,
2023
2022 (1)
2023
2022 (1)
2023
Net income attributable to ARLP
$
115,444
$
216,881
$
630,118
$
586,200
$
153,699
Depreciation, depletion and
amortization
68,400
74,171
267,982
276,670
65,393
Interest expense, net
7,210
7,963
33,403
36,218
6,876
Capitalized interest
(2,274
)
(417
)
(6,706
)
(922
)
(1,809
)
Income tax expense (benefit)
(3,361
)
(1,668
)
8,280
53,978
3,401
EBITDA
185,419
296,930
933,077
952,144
227,560
Equity method investment loss (income)
(2,316
)
(1,058
)
1,468
(5,634
)
1,842
Distributions from equity method
investments
1,040
1,712
3,918
6,675
904
Interest expense, net
(7,210
)
(7,963
)
(33,403
)
(36,218
)
(6,876
)
Income tax benefit (expense)
3,361
1,668
(8,280
)
(53,978
)
(3,401
)
Deferred income tax expense (benefit)
(2)
(5,992
)
(2,474
)
(8,973
)
34,801
(2,400
)
Estimated maintenance capital expenditures
(3)
(55,554
)
(47,731
)
(245,883
)
(200,800
)
(58,910
)
Distributable Cash Flow
$
118,748
$
241,084
$
641,924
$
696,990
$
158,719
Distributions paid to partners
$
90,812
$
65,449
$
364,579
$
196,347
$
90,899
Distribution Coverage Ratio
1.31
3.68
1.76
3.55
1.75
____________________
(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 2024 planning horizon, average annual
estimated maintenance capital expenditures are assumed to be $7.76
per ton produced compared to an estimated $7.05 per ton produced in
2023. 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,
2023
2022 (1)
2023
2022 (1)
2023
Cash flows from operating activities
$
95,231
$
246,143
$
830,642
$
802,349
$
231,388
Capital expenditures
(83,982
)
(65,108
)
(379,338
)
(286,394
)
(110,339
)
Change in accounts payable and accrued
liabilities
(6,689
)
(3,544
)
(29,695
)
35,956
2,624
Free cash flow
$
4,560
$
177,491
$
421,609
$
551,911
$
123,673
(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
Year Ended
Three Months Ended
December 31,
December 31,
September 30,
2023
2022 (1)
2023
2022 (1)
2023
Operating expense
$
356,563
$
378,515
$
1,368,787
$
1,288,082
$
339,099
Outside coal purchases
20,410
—
36,149
151
11,530
Other income
(391
)
(3,016
)
(218
)
(4,355
)
(223
)
Segment Adjusted EBITDA Expense
376,582
375,499
1,404,718
1,283,878
350,406
Segment Adjusted EBITDA Expense – Non Coal
Operations (2)
(7,028
)
(5,452
)
(13,973
)
(5,862
)
(2,116
)
Segment Adjusted EBITDA Expense – Coal
Operations
$
369,554
$
370,047
$
1,390,745
$
1,278,016
$
348,290
_____________________
(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 and general and administrative expenses.
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
Year Ended
Three Months Ended
December 31,
December 31,
September 30,
2023
2022 (1)
2023
2022 (1)
2023
EBITDA (See reconciliation to GAAP
above)
$
185,419
$
296,930
$
933,077
$
952,144
$
227,560
General and administrative
17,784
17,963
79,096
80,425
20,097
Segment Adjusted EBITDA
203,203
314,893
1,012,173
1,032,569
247,657
Segment Adjusted EBITDA – Non Coal
Operations (2)
(47,026
)
(44,428
)
(179,761
)
(192,808
)
(43,322
)
Segment Adjusted EBITDA – Coal
Operations
$
156,177
$
270,465
$
832,412
$
839,761
$
204,335
(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/20240129268672/en/
Cary P. Marshall Senior Vice President and Chief Financial
Officer 918-295-7673 investorrelations@arlp.com
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