Thursday, July 13, 2023
ARLP is a diversified natural resource company that generates operating and royalty income from coal produced by its mining complexes and royalty income from mineral interests it owns in strategic oil & gas producing regions in the United States, primarily the Permian, Anadarko and Williston basins. ARLP currently produces coal from seven mining complexes its subsidiaries operate 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. In addition, ARLP is positioning itself as an energy provider for the future by leveraging its core technology and operating competencies to make strategic investments in the fast growing energy and infrastructure transition.
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Refining estimates. While our 2023 EBITDA and EPU estimates are largely unchanged, we have made some quarterly adjustments lowering our second quarter EPU estimate to $1.30 from $1.35 and increasing our fourth quarter EPU estimate to $1.40 from $1.35. We have increased our coal sales volumes in the fourth quarter and modestly reduced our coal volumes and revenue per ton in the second quarter due in part to lower coal export prices during the second quarter which we think will strengthen during the second half. Second quarter crude oil prices were modestly lower than our estimates while natural gas prices were higher. We have trimmed our 2024 EBITDA and EPS estimates to $1.10 billion and $5.65 from $1.11 billion and $5.70, respectively, to reflect modestly lower coal volumes and prices compared to previous estimates.
Strong cash flow facilitates debt reduction. On July 25, Alliance will redeem $50.0 million of its 7.5% senior notes due 2025, representing 14.7% of the $339.2 million in aggregate notes outstanding. In March, the partnership purchased $26.6 million of its outstanding 2025 senior notes in the open market slightly below par. Alliance can call all or any part of its senior notes at par value and management intends to prioritize purchases with available cash flows in 2023 and 2024.
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