TULSA, Okla.–(BUSINESS WIRE)– Alliance Resource Partners, L.P. (NASDAQ: ARLP) today announced that the Company will attend the NobleCon19 – Noble Capital Markets 19th Annual Emerging Growth Equity Conference in Boca Raton, FL on Monday, December 4, 2023.
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.
Investor Relations Contact Cary P. Marshall Senior Vice President and Chief Financial Officer 918-295-7673 investorrelations@arlp.com
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. We have increased our 2023 EBITDA and EPU estimates to $4.96 and $975.2 million from $966.2 million and $4.89. We decided to increase our total coal sales estimates which are now at the midpoint of guidance instead of at the low end. We also modestly increased our coal sales price per ton estimate to $65.15 from $65.00 but still within the guidance range of $64.50 to $66.00. We have lowered our 2024 EBITDA and EPU estimates to $998.1 million and $5.05 from $1.0 billion and $5.15 based on modestly lower commodity prices.
Why the revisions? Alliance has committed and priced 35.0 million tons in 2023, including 29.7 million tons in the domestic market and 5.3 million tonnes in export markets. While a portion of higher priced export volumes could be deferred into 2024, we think our previous estimate was too conservative. As part of our review, we also adjusted quarterly and full year 2024 estimates and refined both years’ estimates associated with equity method investments.
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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
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.
Third quarter financial results. Alliance reported third quarter EBITDA and earnings per unit (EPU) of $227.6 million and $1.18, respectively, compared to $253.8 million and $1.25 during the prior year period. We had forecast EBITDA and EPU of $240.3 million and $1.20. Revenue increased 0.6% to $636.5 million, while income from operations declined 8.7% to $165.4 million. The company generated free cash flow of $123.7 million and distributable cash flow provided quarterly cash distribution coverage of 1.75x. Third quarter financial results were negatively impacted by lower coal sales volumes and higher costs at its coal operations in Appalachia.
Refined management guidance. Alliance provided updated guidance for the remainder of the year which we have incorporated into our estimates as detailed in the body of this note. Total coal sales are expected to be in the range of 34.5 million to 35.0 million tons compared to previous expectations of 35.5 million to 36.0 million tons, while the coal sales price per ton is expected to be in the range of $64.50 to $66.00 compared to previous guidance of $65.00 to $66.00. Segmented adjusted EBITDA expense per ton sold is expected to be $39.50 to $40.50 compared to previous guidance of $38.00 to $41.00.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Coal sales price realizations of $64.94 per ton sold, up 8.3% year-over-year
Record oil & gas royalty volumes of 772 MBOE sold, up 28.2% year-over-year
Completed two strategic new ventures investments, totaling approximately $50.0 million
Declares a quarterly cash distribution of $0.70 per unit, or $2.80 per unit annualized, up 40.0% year-over-year
Reduced outstanding senior notes by $54.6 million during the 2023 Quarter, resulting in total and net leverage ratio of 0.36 times and 0.17 times, respectively
TULSA, Okla.–(BUSINESS WIRE)– Alliance Resource Partners, L.P. (NASDAQ: ARLP) (“ARLP” or the “Partnership”) today reported financial and operating results for the quarter ended September 30, 2023 (the “2023 Quarter”). Total revenues in the 2023 Quarter increased slightly to $636.5 million compared to $632.5 million for the quarter ended September 30, 2022 (the “2022 Quarter”) primarily as a result of higher transportation and other revenues, partially offset by lower oil & gas royalties. Net income for the 2023 Quarter was $153.7 million, or $1.18 per basic and diluted limited partner unit, compared to $167.7 million, or $1.25 per basic and diluted limited partner unit, for the 2022 Quarter as a result of increased total operating expenses, partially offset by higher interest income and lower income tax expense. EBITDA for the 2023 Quarter was $227.6 million compared to $253.8 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.”)
Compared to the quarter ended June 30, 2023 (the “Sequential Quarter”), total revenues in the 2023 Quarter decreased 0.8% primarily as a result of lower coal sales volumes of 8.5 million tons sold compared to 8.9 million tons sold in the Sequential Quarter, partially offset by higher average coal sales prices, which increased 3.2% to $64.94 per ton sold in the 2023 Quarter. Lower revenues and higher total operating expenses contributed to a reduction in net income and EBITDA of 9.5% and 8.7%, respectively, compared to the Sequential Quarter. (For a definition of EBITDA and related reconciliation to its comparable GAAP financial measure, please see the end of this release.)
Financial and operating results for the nine months ended September 30, 2023 (the “2023 Period”) increased compared to the nine months ended September 30, 2022 (the “2022 Period”). Coal sales prices and coal sales revenues during the 2023 Period were higher by 16.8% and 14.8%, respectively, compared to the 2022 Period. Increased revenues and lower income tax expense were partially offset by higher total operating expenses in the 2023 Period, which resulted in higher net income and EBITDA by 39.4% and 14.1%, respectively, both as compared to the 2022 Period.
CEO Commentary
“Our well-contracted coal order book enabled us to navigate an otherwise challenging operating environment during the 2023 Quarter,” commented Joseph W. Craft III, Chairman, President and Chief Executive Officer. “Our coal segment achieved higher realized pricing per ton sold relative to both the 2022 and Sequential Quarters, a theme that continues to favorably impact year-to-date results, particularly with regards to EBITDA and net income. However, we faced some difficult mining conditions in Appalachia at all three mines during the 2023 Quarter, which resulted in higher operating costs and fewer tons produced versus previous expectations.”
Mr. Craft added, “Our Oil & Gas Royalties segment reported continued growth resulting in record production volumes, underscoring the success of recent acquisitions in core parts of the prolific Permian Basin. Although average realized pricing per BOE during the 2023 Quarter was lower compared to near record levels in the 2022 Quarter, our royalty portfolio is well-positioned to provide significant cash flow via hedge-free exposure to commodity price and cost-free organic growth.”
Mr. Craft concluded, “We are excited to announce direct investments in Ascend Elements and Infinitum during the 2023 Quarter. These companies are led by proven management teams and possess innovative, commercial technologies that, in our view, will reshape their respective industries. Beyond our direct investments, we are actively engaged in discussions with both companies to explore additional strategic opportunities intended to unlock value and growth for our unitholders.”
Coal Operations
ARLP’s coal sales prices per ton increased in all regions compared to both the 2022 and Sequential Quarters. Improved domestic pricing, partially offset by lower export price realizations, drove coal sales prices higher by 10.1% and 3.6% in the Illinois Basin and 11.6% and 6.5% in Appalachia as compared to the 2022 and Sequential Quarters, respectively. Tons sold decreased by 21.7% and 15.2% in Appalachia compared to the 2022 and Sequential Quarters, respectively, due to reduced volumes across the region caused by lock outages, customer plant maintenance, reduced operating units at MC Mining, and unique geologic conditions that delayed development of a new district at our Mettiki longwall operation. ARLP ended the 2023 Quarter with total coal inventory of 1.8 million tons, representing an increase of 0.5 million tons compared to the end of the 2022 Quarter and comparable to the end of the Sequential Quarter.
Segment Adjusted EBITDA Expense per ton for the 2023 Quarter increased by 10.5% in the Illinois Basin compared to the 2022 Quarter, resulting from increased sales-related expenses due to higher price realizations and higher labor-related, roof support and maintenance costs due to days lost by a sizable roof fall in July and a longwall move in August at our Hamilton mine. Segment Adjusted EBITDA Expense per ton in Appalachia increased by 25.3% and 30.4% compared to the 2022 and Sequential Quarters, respectively, due primarily to lower production volumes, purchased coal and increased labor-related, roof support, maintenance and selling expenses per ton.
Royalties
Segment Adjusted EBITDA for the Oil & Gas Royalties segment decreased to $31.4 million in the 2023 Quarter compared to $39.4 million in the 2022 Quarter. The decrease was directly connected to lower price realizations, which decreased by 31.2%, partially offset by record oil & gas volumes, which increased 28.2% to 772 MBOE sold in the 2023 Quarter. Compared to the Sequential Quarter, Segment Adjusted EBITDA increased by 8.0% due to higher prices and volumes. Higher 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 was $9.9 million for the 2023 Quarter, representing a decrease of $1.3 million and $1.1 million compared to the 2022 and Sequential Quarters, respectively, 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.
Balance Sheet and Liquidity
As of September 30, 2023, total debt and finance leases outstanding were $371.0 million, including $284.6 million in ARLP’s 2025 senior notes. During the 2023 Quarter, ARLP redeemed $50.0 million and repurchased $4.6 million of its senior notes due May 1, 2025. The Partnership’s total and net leverage ratio was 0.36 times and 0.17 times, respectively, as of September 30, 2023. ARLP ended the 2023 Quarter with total liquidity of $629.5 million, which included $197.2 million of cash and cash equivalents and $432.3 million of borrowings available under its revolving credit and accounts receivable securitization facilities.
Distributions
On October 25, 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 November 14, 2023, to all unitholders of record as of the close of trading on November 7, 2023. The announced distribution represents a 40.0% increase over the cash distribution of $0.50 per unit for the 2022 Quarter and is consistent with the Sequential Quarter cash distribution.
Strategic Investments
During the 2023 Quarter, ARLP invested approximately $50 million in two companies that align with the Partnership’s strategy to allocate a portion of excess cash flows into high-growth businesses where ARLP can leverage its core competencies to generate meaningful, risk-adjusted returns.
Ascend Elements, Inc. (“Ascend Elements”)
As previously announced, on September 6, 2023, ARLP invested $25 million in Ascend Elements, a U.S.-based manufacturer and recycler of sustainable, engineered battery materials for electric vehicles, as part of its $460 million Series D funding round. This capital, combined with $480 million in total grants awarded by the Department of Energy, will advance construction of North America’s first commercial-scale manufacturing facility, located near Hopkinsville, Kentucky, producing cathode materials for electric vehicle batteries.
In close proximity to ARLP’s western Kentucky mining operations, when complete, the 1-million-square-foot manufacturing facility will produce enough cathode materials for 750,000 electric vehicles per year. ARLP intends to explore other strategic opportunities with Ascend Elements to expand investment in the battery recycling industry and leverage our unique operational expertise, geographic footprint, and strategic relationships in Kentucky and the surrounding battery-belt states to drive value creation for both companies.
Infinitum
During the 2023 Quarter, ARLP invested an additional $24.6 million in Infinitum, a Texas-based developer and manufacturer of high-efficiency electric motors, as part of their ongoing Series E equity raise. The incremental amount brings ARLP’s total investment in the company to approximately $67 million. Infinitum believes that its patented air core motors offer superior performance in half the weight and size, at a fraction of the carbon footprint of traditional motors, making them pound for pound the most efficient in the world.
In addition to the investment, ARLP’s wholly-owned subsidiary Matrix Design Group LLC (“Matrix“) and Infinitum are actively evaluating opportunities to combine Matrix’s underground mining expertise with Infinitum’s technology to deliver much needed innovation to the growing global mining industry by improving the safety, efficiency, and performance of certain mining machinery.
Outlook
“As we assess current market conditions, we have elected to slightly adjust our full year 2023 guidance for coal sales volumes and pricing, which will be highly dependent on logistics during the fourth quarter,” commented Mr. Craft. “We expect Appalachia operating expense per ton sold to be 8-10% higher during the fourth quarter of 2023 as development for the new district at Mettiki is not expected to be complete until late November 2023 and Tunnel Ridge has a normally scheduled longwall move. The new longwall district at Mettiki allows us to develop longer panels that will increase production and reduce unit costs in 2024.”
Mr. Craft closed, “As we look beyond 2023, we are encouraged by improving fundamentals for coal export demand based on recent trends in international benchmark pricing and emerging opportunities we see in the market. On the domestic front, we hold firm in our conviction that the reliability of our product is highly valued by our customers and the long-term potential for higher natural gas prices and growth in electric demand will sustain our projections for coal demand and lead to a slowing in the pre-mature closure of coal-fired power plants in the eastern U.S.”
ARLP is providing the following updated guidance for the 2023 full year:
Conference Call
A conference call regarding ARLP’s 2023 Quarter 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 13741573.
Concurrent with this announcement, we are providing qualified notice to brokers and nominees that hold ARLP units on behalf of non-U.S. investors under Treasury Regulation Section 1.1446-4(b) and (d) and Treasury Regulation Section 1.1446(f)-4(c)(2)(iii). Brokers and nominees should treat one hundred percent (100%) of ARLP’s distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. In addition, brokers and nominees should treat one hundred percent (100%) of the distribution as being in excess of cumulative net income for purposes of determining the amount to withhold. Accordingly, ARLP’s distributions to non-U.S. investors are subject to federal income tax withholding at a rate equal to the highest applicable effective tax rate plus ten percent (10%). Nominees, and not ARLP, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of non-U.S. investors.
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 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, 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 and June 30, 2023, filed on May 9, 2023 and August 8, 2023, respectively. Except as required by applicable securities laws, ARLP does not intend to update its forward-looking statements.
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).
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.
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.
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.
Investor Relations Contact Cary P. Marshall Senior Vice President and Chief Financial Officer 918-295-7673 investorrelations@arlp.com
TULSA, Okla.–(BUSINESS WIRE)– Alliance Resource Partners, L.P. (NASDAQ: ARLP) will report its third quarter 2023 financial results before the market opens on Friday, October 27, 2023. Alliance management will discuss these results during a conference call beginning at 10:00 a.m. Eastern that same day.
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 https://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 13741573.
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 https://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.
Investor Relations Contact Cary P. Marshall Senior Vice President and Chief Financial Officer (918) 295-7673 investorrelations@arlp.com
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.
Strategic investment. Alliance invested $25 million in Ascend Elements, Inc., a U.S.-based manufacturer of sustainable, engineered battery materials for electric vehicles. The investment was part of a $460 million Series D funding round which, combined with $480 million in grants awarded by the Department of Energy and $82 million of earlier investments, will advance construction of a commercial-scale facility in Kentucky using a patented process known as hydro-to-cathode direct precursor synthesis to manufacture NMC cathode precursor material (pCAM) and cathode active material (CAM) recovered from used lithium-ion batteries and battery gigafactory manufacturing scrap for use in electric vehicle batteries.
Project is supported by a multi-year supply agreement. The manufacturing facility will produce enough cathode material for 750,000 electric vehicles per year. Ascend Elements recently executed a multi-year contract to supply approximately $1 billion worth of sustainable pCAM for use in a major U.S. company’s battery manufacturing process beginning in the fourth quarter of 2024. The customer has the option to expand the contract to a larger quantity with a value of up to $5 billion.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
TULSA, Okla.–(BUSINESS WIRE)– Alliance Resource Partners, L.P. (NASDAQ: ARLP) (“ARLP” or the “Partnership”) announced today that it has invested $25 million in Ascend Elements, Inc. (“Ascend Elements”), a U.S.-based manufacturer and recycler of sustainable, engineered battery materials for electric vehicles, as part of its $460 million Series D funding round. This capital, combined with $480 million in total grants awarded by the Department of Energy, will advance construction of North America’s first commercial-scale manufacturing facility, located near Hopkinsville, Kentucky, producing cathode materials for electric vehicle batteries.
“We are excited about our strategic investment in Ascend Elements, which has become a proven leader in the rapidly growing battery and critical material sector supporting electrification of transportation,” said Joseph W. Craft III, ARLP’s Chairman, President, and Chief Executive Officer. “We see a significant need for recycling solutions outside of China and U.S.-based production of cathode materials to address the growing demand for critical battery materials. Ascend Elements’ experienced management team, proprietary technology, and recent commercial success with high-quality OEMs give us the confidence they are well positioned to meet these growing needs while delivering attractive risk-adjusted returns.”
In close proximity to ARLP’s western Kentucky operations, when complete, the 1-million-square-foot manufacturing facility will produce enough cathode materials for 750,000 electric vehicles per year. Underpinning the financing and initial capacity of its operation, Ascend Elements signed a $1 billion contract earlier this year to supply cathode materials in the fourth quarter of 2024 with options to expand the multi-year contract to a larger volume valued up to $5 billion.
Mr. Craft closed, “Beyond this initial investment, we look forward to exploring more strategic opportunities with Ascend Elements to expand our investment in the battery recycling industry and leverage our unique operational expertise, geographic footprint, and strategic relationships in Kentucky and the surrounding battery-belt states to further unlock value and growth for both companies.”
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.
About Ascend Elements, Inc
Based in Westborough, Mass., Ascend Elements is the leading provider of sustainable, closed-loop battery materials solutions. From EV battery recycling to commercial-scale production of lithium-ion battery precursor (“pCAM”) and cathode active materials (“CAM”), Ascend Elements is revolutionizing the production of sustainable lithium-ion battery materials. Its proprietary Hydro-to-Cathode® direct precursor synthesis technology produces new pCAM from spent lithium-ion cells more efficiently than traditional methods, resulting in reduced cost, improved performance, and lowered GHG emissions. With fewer batteries going to landfill and a cleaner manufacturing process, Ascend Elements is taking the lithium-ion battery industry to a higher level of sustainability.
Cary P. Marshall Senior Vice President and Chief Financial Officer 918-295-7673 investorrelations@arlp.com
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.
Second quarter financial results. Alliance reported second quarter EBITDA and earnings per unit (EPU) of $249.2 million and $1.30, respectively, compared to $246.9 million and $1.23 during the prior year period. EPU was in line with our estimate and was modestly ahead of the consensus. We had forecast EBITDA and EPU of $254.4 million and $1.30. Revenue increased 3.5% to $641.8 million, while income from operations increased 3.7% to $183.9 million. The company generated free cash flow of $153.5 million compared to $81.3 million during the prior year period and distributable cash flow provided quarterly cash distribution coverage of 1.9x.
Refined management guidance. Alliance provided updated guidance for the remainder of the year which we have incorporated into our estimates as detailed in the body of this note. Total coal sales are expected to be in the range of 35.5 million to 36.0 million tons compared to previous expectations of 36.0 million to 38.0 million tons, while the coal sales price per ton is expected to be in the range of $65 to $66 compared to previous guidance of $65 to $67. Alliance also guided to lower depreciation, depletion, and amortization, general and administrative, and income tax expense.
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Net income of $169.8 million, or $1.30 per unit, a 3.8% increase compared to $163.5 million, or $1.23 per unit for the 2022 Quarter
EBITDA of $249.2 million, up 1.0% year-over-year
Repurchased $34.2 million of outstanding senior notes during the 2023 Quarter and redeemed an additional $50.0 million of senior notes in July 2023
Declared a quarterly cash distribution in July 2023 of $0.70 per unit, or $2.80 per unit annualized, up 75.0% year-over-year
TULSA, Okla.–(BUSINESS WIRE)– Alliance Resource Partners, L.P. (NASDAQ: ARLP) (“ARLP” or the “Partnership”) today reported increased financial and operating results for the quarter ended June 30, 2023 (the “2023 Quarter”) compared to the quarter ended June 30, 2022 (the “2022 Quarter”). Total revenues in the 2023 Quarter increased 3.5% to $641.8 million compared to $619.9 million for the 2022 Quarter driven primarily by higher coal sales price per ton, which rose by 5.7%, partially offset by lower oil & gas royalty prices. Increased revenues, partially offset by higher total operating expenses, led to net income for the 2023 Quarter of $169.8 million, or $1.30 per basic and diluted limited partner unit, compared to $163.5 million, or $1.23 per basic and diluted limited partner unit, for the 2022 Quarter. (Unless otherwise noted, all references in the text of this release to “net income” refer to “net income attributable to ARLP.”)
Compared to the quarter ended March 31, 2023 (the “Sequential Quarter”), total revenues in the 2023 Quarter decreased by 3.2% primarily as a result of lower average coal sales prices of $62.93 per ton sold compared to $68.34 per ton sold in the Sequential Quarter, partially offset by higher coal sales volumes, which rose 5.1% to 8.9 million tons sold in the 2023 Quarter. Lower revenues contributed to a reduction in net income and EBITDA of 11.2% and 8.0%, respectively, compared to the Sequential Quarter. (For a definition of EBITDA and related reconciliation to its comparable GAAP financial measure, please see the end of this release.)
Financial and operating results for the six months ended June 30, 2023 (the “2023 Period”) increased compared to the six months ended June 30, 2022 (the “2022 Period”). Coal sales prices and coal sales revenues during the 2023 Period were higher by 21.8% and 23.8%, respectively, compared to the 2022 Period. Increased revenues and lower income tax expense, partially offset by higher total operating expenses, in the 2023 Period drove net income higher by 79.0% and EBITDA increased 29.6%, both as compared to the 2022 Period.
CEO Commentary
“ARLP delivered solid results during the second quarter of 2023, keeping us on track to deliver record financial results this year,” commented Joseph W. Craft III, Chairman, President and Chief Executive Officer. “Continued strength in our contract book positioned our coal operations to achieve higher realized pricing per ton sold and Segment Adjusted EBITDA relative to the 2022 Quarter and the 2022 Period. Our year-to-date results have been impressive despite coal demand, both domestically and globally, being lower than we expected entering this year, due to slower economic growth, mild weather in our targeted markets, and lower natural gas prices.”
Mr. Craft added, “Recent reports of sustained, record heat in many parts of the U.S. should once again emphasize our nation’s critical need for a reliable, affordable, and diverse energy mix. Markets can turn quickly in response to moderate swings in demand, particularly when supply remains constrained and policy decisions impact reliability. Our operations continue to provide a low-cost, secure source of supply for our customers, and with our recent actions to further strengthen our balance sheet, we expect to do so well into the future.”
Coal Operations
ARLP’s coal sales prices per ton increased compared to the 2022 Quarter as improved domestic price realizations drove coal sales prices higher by 9.8% and 3.5% in the Illinois Basin and Appalachia, respectively. Compared to the Sequential Quarter, lower domestic and export prices led to a decrease of 24.1% in coal sales prices in Appalachia. Tons sold increased by 4.0% in the Illinois Basin compared to the 2022 Quarter due primarily to increased volumes from the Hamilton and Warrior mines. Appalachia coal sales volumes decreased by 8.5% compared to the 2022 Quarter as a result of reduced export sales across the region and lower production from our MC Mining operation. Compared to the Sequential Quarter, Illinois Basin coal sales volumes decreased 2.0% due to lower volumes from River View while coal sales volumes increased by 24.5% in Appalachia due to higher volumes from Tunnel Ridge as a result of longwall moves at the mine in the Sequential Quarter. ARLP ended the 2023 Quarter with total coal inventory of 1.8 million tons, representing an increase of 0.2 million tons and 0.5 million tons compared to the end of the 2022 and Sequential Quarters, respectively.
Segment Adjusted EBITDA Expense per ton increased by 6.0% in the Illinois Basin compared to the 2022 Quarter, resulting from higher labor-related expenses and maintenance costs as well as increased sales-related expenses due to higher price realizations. Segment Adjusted EBITDA Expense per ton in Appalachia increased by 11.1% compared to the 2022 Quarter, due primarily to increased labor-related expenses, purchased coal and higher inventory charges, partially offset by increased recoveries and lower selling expenses due to a greater mix of coal sales from operations in states with lower severance taxes per ton during the 2023 Quarter. Compared to the Sequential Quarter, Segment Adjusted EBITDA Expense per ton increased 5.8% in the Illinois Basin primarily due to reduced coal sales volumes from our lower cost Gibson South and River View mines during the 2023 Quarter. In Appalachia, Segment Adjusted EBITDA Expense per ton decreased 23.8% compared to the Sequential Quarter as a result of higher sales volumes from our lower cost Tunnel Ridge mine during the 2023 Quarter, increased recoveries across the region and longwall moves at Tunnel Ridge during the Sequential Quarter.
Royalties
Segment Adjusted EBITDA for the Oil & Gas Royalties segment decreased to $29.1 million in the 2023 Quarter compared to $37.6 million and $30.0 million in the 2022 and Sequential Quarters, respectively, primarily due to lower average sales prices per BOE, partially offset by higher BOE volumes sold. Higher BOE volumes during the 2023 Quarter compared to the 2022 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 increased to $11.0 million for the 2023 Quarter compared to $9.1 million and $10.1 million for the 2022 and Sequential Quarters, respectively, as a result of higher average royalty rates per ton received from the Partnership’s mining subsidiaries.
Balance Sheet and Liquidity
During the 2023 Quarter, ARLP repurchased $34.2 million of its senior notes due May 1, 2025 and began principal payments on its term loan. In July 2023, ARLP redeemed an additional $50.0 million of its senior notes.
As of June 30, 2023, total debt and finance leases outstanding were $417.8 million, including $339.2 million in ARLP’s 2025 senior notes. The Partnership’s total and net leverage ratio was 0.40 times and 0.14 times, respectively, as of June 30, 2023. ARLP ended the 2023 Quarter with total liquidity of $717.2 million, which included $284.9 million of cash and cash equivalents and $432.3 million of borrowings available under its revolving credit and accounts receivable securitization facilities.
Distributions
As previously announced, on July 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 August 14, 2023, to all unitholders of record as of the close of trading on August 7, 2023. The announced distribution represents a 75.0% increase over the cash distribution of $0.40 per unit for the 2022 Quarter and is consistent with the Sequential Quarter cash distribution.
Outlook
“The recent heat wave has supported additional coal burn this summer for both the domestic and export markets. However, until Henry Hub natural gas prices rise above $3.00 per million Btu, we do not expect any meaningful gas-to-coal switching domestically. Therefore, we have chosen to reduce our coal production and sales volume guidance for 2023. Production targets have been reduced at our River View and Gibson operations in the Illinois Basin and at our Mettiki operation in Appalachia,” commented Mr. Craft. “Committed and priced sales tons currently represent 96% to 97% of our updated guidance range, and we plan to sell any remaining uncontracted tonnage primarily into international markets from these three mines. We have also adjusted the top end of our coal sales price per ton sold range downward based upon recent market analysis. On the positive side, we are lowering our cost estimates for the year as our team continues to find ways to reduce expenses in a stubbornly volatile inflationary environment.”
Mr. Craft added, “During the 2023 Quarter, we agreed to sell an additional 8.6 million tons with multiple customers for coal to be delivered over the 2024 to 2026 time period. We expect there will be more opportunities this year to fill out our future contract book.”
Mr. Craft closed, “These modest guidance revisions have not changed our view that we remain on track to achieve record financial results this year. As we look beyond 2023, we are encouraged by growth opportunities being pursued by our New Ventures group, the recent increase in the forward oil and gas price curves and acquisition prospects for our Oil & Gas Royalties segment. We are also seeing stability for coal demand over the next several years. Many of our coal customers are projecting significant growth in electricity demand as record numbers of new manufacturing facilities are being announced to come online over the next several years. All of these announced projects require exceptionally large electrical loads, adding to the reliability concerns of the stakeholders responsible for meeting the rising energy needs of their customers. The increased electricity demand should lead to slowing the pre-mature closing of coal-fired power plants in the eastern United States. We also expect the growth in LNG terminals coming online over the next five years will support higher domestic natural gas prices further supporting stable demand expectations for our coal operations over the next five to ten years.”
ARLP is providing the following updated guidance for the 2023 full year:
Conference Call
A conference call regarding ARLP’s 2023 Quarter 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 “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 13739987.
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; central bank policy actions, 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 Report on Form 10-Q for the quarter ended March 31, 2023, filed on May 9, 2023. Except as required by applicable securities laws, ARLP does not intend to update its forward-looking statements.
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).
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.
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.
Cary P. Marshall Senior Vice President and Chief Financial Officer 918-295-7673 investorrelations@arlp.com
TULSA, Okla.–(BUSINESS WIRE)– Alliance Resource Partners, L.P. (NASDAQ: ARLP) will report its second quarter 2023 financial results before the market opens on Monday, July 31, 2023. Alliance management will discuss these results during a conference call beginning at 10:00 a.m. Eastern that same day.
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 13739987.
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.
Cary P. Marshall Senior Vice President and Chief Financial Officer (918) 295-7673 investorrelations@arlp.com
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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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
TULSA, Okla.–(BUSINESS WIRE)– Alliance Resource Partners, L.P. (NASDAQ: ARLP) today announced that Joseph W. Craft III, Chairman, President and Chief Executive Officer, and other members of management will participate in investor meetings at the 20th Annual Energy Infrastructure Council CEO & Investor Conference in West Palm Beach, Florida on Tuesday, May 23, 2023.
A presentation will also be available May 23, 2023 on ARLP’s website (www.arlp.com) under “Investor Relations” and “Events & Presentations.”
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.
Investor Relations Contact Cary P. Marshall Senior Vice President and Chief Financial Officer 918-295-7673 investorrelations@arlp.com
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.
First quarter financial results. Alliance reported first quarter EBITDA and earnings per unit (EPU) of $270.9 million and $1.45, respectively, compared to $154.6 million and $0.28 during the prior year period and $293.9 million and $1.63 during the fourth quarter of 2022. We had forecast EBITDA and EPU of $251.0 million and $1.25. While revenue of $662.9 million was modestly above our estimate of $661.1 million, operating expenses of $338.7 million were well below our estimate of $367.1 million.
Updated guidance. Alliance provided updated 2023 guidance which we have incorporated into our estimates as detailed in the body of this note. While total coal sales volume is still expected to be 36.0 million to 38.0 million tons, coal sales price per ton was reduced to a range of $65 to $67 from $67 to $69 driven by lower pricing expectations for ARLP’s uncontracted coal tonnage position. As a partial offset, segment adjusted EBITDA expense per ton sold was also lowered to $39 to $42 from $40.25 to $42.25. Importantly, Alliance increased the midpoint of its full year guidance for oil and gas volumes on a barrel of oil equivalent basis by approximately 9% due to strong performance on all of its acreage exceeding initial expectations.
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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
