TULSA, Okla.–(BUSINESS WIRE)– Alliance Resource Partners, L.P. (NASDAQ: ARLP) will report its first quarter 2023 financial results before the market opens on Tuesday, May 2, 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 13737890.
About Alliance Resource Partners, L.P.
ARLP is a diversified energy company that is currently the largest coal producer in the eastern United States, supplying reliable, affordable energy domestically and internationally to major utilities, metallurgical and industrial users. ARLP also generates operating and royalty income from mineral interests it owns in strategic coal and oil & gas producing regions in the United States. In addition, ARLP is evolving and positioning itself as a reliable energy partner for the future by pursuing opportunities that support the advancement of energy and related infrastructure.
News, unit prices and additional information about ARLP, including filings with the Securities and Exchange Commission (“SEC”), are available at www.arlp.com. For more information, contact the investor relations department of ARLP at (918) 295-7673 or via e-mail at investorrelations@arlp.com.
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, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Lowering estimates. We have lowered our 2023 EBITDA and earnings per share estimates to $1.09 billion and $5.50 from $1.14 billion and $5.90, respectively. While we lowered our first half revenue expectations, our full year revenue estimate was increased based on greater contributions from the coal segment and expectations for an improved commodity price environment in the second half of the year. Notably, we refined and increased our operating cost estimates to reflect higher labor costs, sales-related expenses, and operational costs related to longwall moves within the mining segment.
First half challenged by declining commodity prices. Prices for crude oil and natural gas have declined throughout the year. While coal prices have softened in recent weeks, 34.7 million tons of the partnership’s 2023 planned coal sales, or 94% at the mid-point of guidance, were committed and priced as of the date of ARLP’s fourth quarter conference call. Year-to-date through March 28, crude oil and natural gas futures prices averaged $76.33 per barrel and $2.84 per thousand cubic feet (Mcf) compared to $80.47 per barrel and $4.48 per Mcf at the end of 2022 and $73.38 per barrel and $2.16 per Mcf as of March 28. As a result, we lowered our expectations for the oil & gas royalty segment.
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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, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Another stellar quarter. Alliance reported fourth quarter EBITDA and earnings per unit (EPU) of $293.9 million and $1.63, respectively, compared to $130.2 million and $0.40 during the prior year period. We had forecast net income and EPU of $272.8 million and $1.42. The partnership’s coal and oil & gas royalties segments performed stronger than expected due to higher volumes and commodity prices.
Updating estimates. We have increased our 2023 EBITDA and earnings per unit estimates to $1.18 billion and $5.90, respectively, from $1.12 billion and $5.85. Based on contracted coal sales volumes in 2023 and 2024, the outlook for cash flow growth appears favorable. Within the oil and gas royalty segment, volumes are expected to benefit from recent acquisitions, including the purchase of 2,682 net oil and gas royalty acres in the Permian Basin which is expected to close shortly with an effective date of January 1, 2023.
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.
Fourth quarter 2022 revenue of $700.7 million, net income of $214.5 million, and EBITDA of $293.9 million, up 48.0%, 313.8%, and 125.7%, respectively, year-over-year
Record full year 2022 revenue of $2.4 billion, net income of $577.2 million, and EBITDA of $940.2 million, up 53.3%, 224.0%, and 96.3%, respectively, year-over-year
In January 2023, increased quarterly cash distribution rate to $0.70 per unit, or $2.80 per unit annualized, up 40.0% from the last quarter and 180.0% year-over-year
In January 2023, increased unit repurchase program to $100.0 million
Completed $81.2 million acquisition of previously announced oil & gas mineral interests in October 2022, and today, separately announced a $72.3 million acquisition of oil & gas mineral interests
In January 2023, successfully refinanced existing revolving credit facility, extending liquidity and financial flexibility through March 2027
2023 expected coal sales volumes approximately 94% committed and priced above 2022 per ton levels
TULSA, Okla.–(BUSINESS WIRE)– Alliance Resource Partners, L.P. (NASDAQ: ARLP) (“ARLP” or the “Partnership”) today reported substantial increases to financial and operating results for the quarter and year ended December 31, 2022 (the “2022 Quarter” and “2022 Full Year”, respectively) compared to the quarter and year ended December 31, 2021 (the “2021 Quarter” and “2021 Full Year”, respectively).
Total revenues in the 2022 Quarter increased 48.0% to a record $700.7 million compared to $473.5 million for the 2021 Quarter as a result of significantly higher coal sales and oil & gas royalties revenues. Increased revenues, partially offset by higher total operating expenses, led net income for the 2022 Quarter to a record $214.5 million, or $1.63 per basic and diluted limited partner unit, compared to $51.8 million, or $0.40 per basic and diluted limited partner unit, for the 2021 Quarter. EBITDA also increased 125.7% in the 2022 Quarter to $293.9 million compared to $130.2 million in the 2021 Quarter. (Unless otherwise noted, all references in the text of this release to “net income” refer to “net income attributable to ARLP.” For a definition of EBITDA and related reconciliation to its comparable GAAP financial measure, please see the end of this release.)
2022 Full Year performance saw total revenues increase 53.3% to a record $2.4 billion compared to $1.6 billion for the 2021 Full Year, primarily due to substantial increases in prices and volumes from both ARLP’s coal operations and royalty segments. Higher revenues, partially offset by increased total operating and income tax expenses, led to significantly higher net income, which rose 224.0% to a record $577.2 million, or $4.39 per basic and diluted limited partner unit, compared to $178.2 million, or $1.36 per basic and diluted limited partner unit, for the 2021 Full Year. EBITDA increased 96.3% to $940.2 million compared to $479.1 million for the 2021 Full Year.
CEO Commentary
“ARLP’s record performance during the 2022 quarter and full year, in a supply and transportation constrained operating environment, is a testament to our team’s ability to execute and deliver reliable energy supply under challenging circumstances,” commented Joseph W. Craft III, Chairman, President, and Chief Executive Officer. “In 2022, ARLP achieved its highest reported EBITDA and operating cash flow in the Partnership’s 23-year history, driven by continued growth in sales volumes coupled with higher price realizations across our coal operations and royalty segments.”
Mr. Craft added, “With our strong balance sheet and relentless focus on cash flow generation, we are well positioned to capitalize on growth opportunities in the market and return capital to our unitholders. Based on our highly committed coal sales book and visibility into our end markets, last week we were pleased to announce a 40% increase in ARLP’s quarterly cash distribution rate to $0.70 per unit, or $2.80 per unit on an annualized basis. This increase is consistent with our long-term strategic capital allocation plans and is well-supported by strong visibility into future cash flows with approximately 94% of our expected 2023 coal sales volumes committed and priced as we enter the year. I am proud of the team’s record of success, and, as reflected in our initial guidance, look forward to achieving even stronger results in 2023.”
Coal Operations
ARLP’s coal sales prices per ton increased significantly compared to the 2021 Quarter as improved price realizations in both the domestic and export markets drove coal sales prices higher by 38.0% and 67.7% in the Illinois Basin and Appalachia, respectively. Compared to the quarter ended September 30, 2022 (the “Sequential Quarter”), higher export prices led to an 11.7% increase in coal sales price realizations in the Illinois Basin while higher domestic prices primarily from our Tunnel Ridge mine resulted in an increase of 16.4% in Appalachian coal sales prices. Tons sold remained relatively consistent in the Illinois Basin compared to the 2021 Quarter while increasing by 9.0% in Appalachia due primarily to increased sales volumes from Tunnel Ridge as a result of higher recoveries. Compared to the Sequential Quarter, increased sales volumes from our Gibson South and River View mines resulted in 2.9% higher tons sold in the Illinois Basin. Coal sales volumes in Appalachia decreased by 1.8% compared to the Sequential Quarter due to higher sales from inventory at Tunnel Ridge in the Sequential Quarter. ARLP ended the 2022 Quarter with total coal inventory of 0.5 million tons, which included 0.2 million tons staged at ports for vessel export in early 2023.
Segment Adjusted EBITDA Expense per ton increased by 21.5% and 13.3% in the Illinois Basin and Appalachia, respectively, compared to the 2021 Quarter primarily as a result of ongoing inflationary pressures on certain expense items, most notably labor-related expenses, supply and maintenance costs, increased sales-related expenses due to higher price realizations, and $6.5 million of non-cash accruals for certain long-term liabilities. Also specific to the 2022 Quarter, a thermal event at our Hamilton mine resulted in an unexpected outage that lasted approximately four weeks. There were no injuries to personnel, no damage to the equipment, and mining operations returned to normal production levels in December 2022; however, third-party expenses related to the event were approximately $5.8 million and approximately 0.5 million tons of production was lost in the 2022 Quarter. Excluding certain non-cash liability accruals and the Hamilton event related expenses, Illinois Basin Segment Adjusted EBITDA Expense per ton for the 2022 Quarter would have been more in-line with the percentage increases realized in Appalachia for the 2022 Quarter.
Royalties
Segment Adjusted EBITDA for our Oil & Gas Royalties segment increased 44.1% to $32.2 million in the 2022 Quarter compared to $22.4 million in the 2021 Quarter primarily due to significantly higher oil & gas royalty volumes, which rose by 42.6% to a record 653,000 BOE sold as a result of increased drilling and completion activities and additional volumes from oil & gas mineral interest acquisitions completed during 2022. Compared to the Sequential Quarter, Segment Adjusted EBITDA decreased by 9.9% in the 2022 Quarter primarily due to lower price realizations, which decreased by 13.3%, partially offset by higher oil & gas volumes, which increased by 18.5%.
Segment Adjusted EBITDA for our Coal Royalties segment decreased 17.9% to $8.2 million for the 2022 Quarter compared to $9.9 million for the 2021 Quarter primarily related to the Hamilton thermal event which reduced royalty tons sold by 8.5%. Compared to the Sequential Quarter, Segment Adjusted EBITDA decreased 26.8% due to lower royalty tons sold and average royalty rates per ton due to the Hamilton thermal event.
Balance Sheet and Liquidity
In January 2023, the Partnership entered into a new $425.0 million senior secured revolving credit facility and $75.0 million term loan (the “Credit Facilities”), which will mature in March 2027, and renewed its $60.0 million accounts receivable securitization facility. The Credit Facilities will replace the previous revolving credit facility, which was set to mature in March 2024. More information regarding the Credit Facilities is provided in our Form 8-K filing made on January 20, 2023.
As of December 31, 2022, total debt and finance leases outstanding were $427.6 million, including $400.0 million in ARLP’s 2025 senior notes. The Partnership’s total and net leverage ratio improved to 0.45 times and 0.14 times, respectively, during the 2022 Quarter. ARLP ended the year with total liquidity of $762.8 million, which included $296.0 million of cash and cash equivalents and $466.7 million of borrowings available under our previous revolving credit and accounts receivable securitization facilities.
Distributions
As previously announced on January 27, 2023, the Board of Directors of ARLP’s general partner (the “Board”) approved a cash distribution to unitholders for the 2022 Quarter of $0.70 per unit (an annualized rate of $2.80 per unit), payable on February 14, 2023, to all unitholders of record as of the close of trading on February 7, 2023. The announced distribution represents a 180.0% increase over the cash distribution of $0.25 per unit for the 2021 Quarter and is a 40.0% increase over the cash distribution of $0.50 per unit for the Sequential Quarter.
Unit Repurchase Program
ARLP also announced today that the Board has authorized an increase to the previously established unit repurchase program, which had $6.5 million of available capacity as of December 31, 2022. The expanded unit repurchase program authorizes ARLP to repurchase up to $100.0 million of its outstanding limited partner common units. The unit repurchase program announced today is intended to enhance ARLP’s ability to achieve its goal of creating long-term value for unitholders and, along with management’s objective of increasing quarterly cash distributions, increases flexibility in returning cash to unitholders. Future unit repurchases and distributions will be subject to ongoing Board review and authorization and will be based on a number of factors, including ARLP’s financial and operating performance and other capital requirements as well as future economic, business and market conditions.
The unit repurchase program has no time limit and ARLP may repurchase units from time to time in the open market or in other privately negotiated transactions. The unit repurchase program authorization does not obligate ARLP to repurchase any dollar amount or number of its units and repurchases may be commenced or suspended from time to time without prior notice.
January 2023 Acquisition of Oil & Gas Royalties
On January 27, 2023, the Board approved an acquisition of 2,682 net oil and gas royalty acres in the Permian Basin from JC Resources LP, an entity owned by Mr. Craft, for a cash purchase price of $72.3 million, subject to customary closing adjustments. Upon closing, the acquisition is expected to be immediately accretive to cash flow. The purchase price will be funded with available cash and is expected to close within the next 30 days based on an effective date of January 1, 2023. Since the acquisition involves a related party, terms of the transaction were approved by the Board’s conflicts committee, which is comprised entirely of independent directors.
Outlook
“The supply driven energy crisis, Russia’s invasion of Ukraine and the steep build of inflation disrupted energy prices and placed a new emphasis on energy security in 2022,” commented Mr. Craft. “Europe’s shift from Russian energy and U.S. and its allies’ economic sanctions are lowering Russian supply to the world, changing global energy trade routes and energy markets for several years to come, if not permanently. U.S. natural gas and coal exports should benefit in 2023 and beyond.”
“Due in part to this ongoing disruption, ARLP is well positioned to achieve another record year in 2023 by increasing production and sales by one to two million tons and relying on our highly committed coal contract book and a favorable market outlook to deliver 13.0 to 17.0% higher realized pricing compared to 2022,” commented Mr. Craft. “Even though natural gas prices have fallen recently due to the warm winter experienced so far, coal prices remain elevated in anticipation of international demand firming throughout the year as China’s economy reopens and as European markets look to replace 40 million tons of Russian coal imports received last year but unavailable this year. While the recent decline in natural gas prices are expected to impact our oil & gas royalties segment in the front half of the year, our coal segment should not be meaningfully affected due to our contracted position. In the back of this year and into 2024, we expect global economic activity will result in rising oil, gas and coal prices, and support our guidance.”
Mr. Craft concluded, “We are beginning to see the significant inflation experienced last year start to level off, however labor pressures and higher sales related expenses as a result of higher price realizations and coal sales volumes will continue to add to our costs in 2023. However, we expect favorable market forces and our current coal sales commitments will drive top line growth that should more than offset these inflationary pressures as margins are expected to improve across our business in 2023 versus the prior year.”
ARLP is providing the following initial guidance for the 2023 full year:
Conference Call
A conference call regarding ARLP’s 2022 Quarter and Year financial results and 2023 outlook 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 http://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 13735338.
About Alliance Resource Partners, L.P.
ARLP is a diversified energy company that is one of the largest coal producers in the eastern United States. 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 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.
News, unit prices and additional information about ARLP, including filings with the Securities and Exchange Commission (“SEC”), are available at http://www.arlp.com. For more information, contact the investor relations department of ARLP at (918) 295-7674 or via e-mail at investorrelations@arlp.com.
The statements and projections used throughout this release are based on current expectations. These statements and projections are forward-looking, and actual results may differ materially. These projections do not include the potential impact of any mergers, acquisitions or other business combinations that may occur after the date of this release. We have included more information below regarding business risks that could affect our results.
FORWARD-LOOKING STATEMENTS: With the exception of historical matters, any matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projected results. Those forward-looking statements include expectations with respect to 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, among others. These risks to our ability to achieve these outcomes include, but are not limited to, the following: the outcome or escalation of current hostilities in Ukraine, the severity, magnitude, and duration of the COVID-19 pandemic and the emergence of new virus variants, and impacts of the pandemic and of businesses’ and governments’ responses to the pandemic, including actions to mitigate its impact and the development of treatments and vaccines, 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; changes in macroeconomic and market conditions and market volatility, and the impact of such changes and volatility on our financial position; 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 global economic and geo-political conditions or in industries in which we or our customers operate; changes in commodity prices, demand and availability which could affect our operating results and cash flows; 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 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, MatrixDesign Group, LLC, and our investments in emerging infrastructure and technology companies; dependence on significant customer contracts, including renewing existing contracts upon expiration; adjustments made in price, volume, or terms to existing coal supply agreements; the effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; the effects of and changes in taxes or tariffs and other trade measures adopted by the United States and foreign governments; legislation, regulations, and court decisions and interpretations thereof, both domestic and foreign, including those relating to the environment and the release of greenhouse gases, mining, miner health and safety, hydraulic fracturing, and health care; deregulation of the electric utility industry or the effects of any adverse change in the coal industry, electric utility industry, or general economic conditions; investors’ and other stakeholders’ increasing attention to environmental, social and governance matters; liquidity constraints, including those resulting from any future unavailability of financing; customer bankruptcies, cancellations or breaches to existing contracts, or other failures to perform; customer delays, failure to take coal under contracts or defaults in making payments; our productivity levels and margins earned on our coal sales; disruptions to oil & gas exploration and production operations at the properties in which we hold mineral interests; changes in equipment, raw material, service or labor costs or availability, including due to inflationary pressures; changes in our ability to recruit, hire and maintain labor, including as a result of the potential impact of government-imposed vaccine mandates; 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 shortages 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, 2021, filed on February 25, 2022 and amended on August 26, 2022, and ARLP’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022, June 30, 2022 and September 30, 2022, filed on May 9, 2022, August 8, 2022 and November 7, 2022, 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 interest expense (before capitalized interest), interest income, income taxes and estimated maintenance capital expenditures. Distribution coverage ratio (“DCR”) is defined as DCF divided by distributions paid to partners.
Management believes that the presentation of such additional financial measures provides useful information to investors regarding our performance and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) provide additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions and (iii) present measurements that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations.
EBITDA, DCF and DCR should not be considered as alternatives to net income attributable to ARLP, net income, income from operations, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. EBITDA and DCF are not intended to represent cash flow and do not represent the measure of cash available for distribution. Our method of computing EBITDA, DCF and DCR may not be the same method used to compute similar measures reported by other companies, or EBITDA, DCF and DCR may be computed differently by us in different contexts (i.e. public reporting versus computation under financing agreements).
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 and other income or expense. Transportation expenses are excluded as these expenses are passed through to our customers and, consequently, we do not realize any margin on transportation revenues. Segment Adjusted EBITDA Expense is used as a supplemental financial measure by our management to assess the operating performance of our segments. Segment Adjusted EBITDA Expense is a key component of EBITDA 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 excludes expenses of our Oil & Gas Royalties segment and is adjusted for intercompany interactions with our Coal Royalties segment.
Segment Adjusted EBITDA is defined as net income attributable to ARLP before net interest expense, income taxes, depreciation, depletion and amortization, general and administrative expenses and settlement gains. Segment Adjusted EBITDA – Coal Operations excludes the contribution of our Oil & Gas and Coal Royalties segments to allow management to focus solely on the operating performance of our Illinois Basin and Appalachia segments.
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, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Quarterly cash distribution increased 40%. For the December 2022 quarter, ARLP unit holders will receive a cash distribution of $0.70 per unit, or $2.80 on an annualized basis, payable on February 14, 2023 to unit holders of record as of the February 7, 2023 close. The announced distribution represents a 180% increase over the cash distribution of $0.25 per unit for the quarter ended December 31, 2021 and a 40% increase over the cash distribution of $0.50 per unit for the quarter ended September 30, 2022. We had assumed the quarterly cash distribution would be increased to $0.55.
Fourth quarter and full year 2022 financial results. ARLP will report financial results for the fourth quarter and full year 2022 before the market opens on Monday, January 30, 2023. Management will host a conference call for investors at 10:00 am ET on the same day.
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) today announced that the Board of Directors of ARLP’s general partner approved an increased cash distribution to its unitholders for the quarter ended December 31, 2022 (the “2022 Quarter”).
ARLP unitholders will receive a cash distribution for the 2022 Quarter of $0.70 per unit (an annualized rate of $2.80 per unit), payable on February 14, 2023 to all unitholders of record as of the close of trading on February 7, 2023. The announced distribution represents a 180% increase over the cash distribution of $0.25 per unit for the quarter ended December 31, 2021 and a 40% increase over the cash distribution of $0.50 per unit for the quarter ended September 30, 2022.
As previously announced, ARLP will report financial results for the 2022 Quarter before the market opens on Monday, January 30, 2023 and 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 http://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 13735338.
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 the second largest coal producer in the eastern United States. 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 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.
News, unit prices and additional information about ARLP, including filings with the Securities and Exchange Commission (“SEC”), are available at http://www.arlp.com. For more information, contact the investor relations department of ARLP at (918) 295-7674 or via e-mail at investorrelations@arlp.com.
Brian L. Cantrell Alliance Resource Partners, L.P. (918) 295-7674
TULSA, Okla.–(BUSINESS WIRE)– Alliance Resource Partners, L.P. (NASDAQ: ARLP) will report its fourth quarter 2022 financial results before the market opens on Monday, January 30, 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 http://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 13735338.
About Alliance Resource Partners, L.P.
ARLP is a diversified energy company that is currently the second largest coal producer in the eastern United States. 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 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.
News, unit prices and additional information about ARLP, including filings with the Securities and Exchange Commission (“SEC”), are available at http://www.arlp.com. For more information, contact the investor relations department of ARLP at (918) 295-7674 or via e-mail at investorrelations@arlp.com.
Brian L. Cantrell Alliance Resource Partners, L.P. (918) 295-7673
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, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
A top pick for 2023. During our recent Wall Street Wish List virtual conference, we highlighted our top picks for 2023. Alliance Resource Partners earned its place based on a superb management team, favorable fundamental outlook, and positive cash flow growth outlook. While fossil fuels are out of favor in some quarters, they power our economy. In our view, the geopolitical weaponizing of global energy supplies, along with the recent cold snap across the U.S. underscore the importance of reliable and affordable domestic supplies of coal, oil, and natural gas. Demand for fossils fuels will likely increase, with renewable energy increasing its share of the market share over time.
Earnings visibility is very strong. During the third quarter, Alliance executed new coal sales commitments for delivery of 5.6 million tons through 2025 at prices supporting higher margins. Based on contracted coal sales volumes in 2023 and 2024, the outlook for cash flow growth appears favorable. Alliance recently added a fifth continuous mining unit at its Gibson South mine and is adding another unit at the Hamilton mine. Within the oil and gas royalty segment, volumes are expected to benefit from two recent acquisitions that added 1,200 producing wells, 101 wells to be completed and 98 permitted locations on the acquired acreage.
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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, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Enviable year-over-year comparisons. Alliancereported third quarter net income of $164.6 million or $1.25 per limited partner unit compared to $57.5 million or $0.44 per limited partner unit during the prior year period. The company generated EBITDA of $250.2 million compared to $135.9 million during the prior year period and free cash flow increased to $244.5 million from $120.5 million. Third quarter financial results reflected higher coal sales prices and volumes which increased 40.5% and 8.1%, respectively, along with greater oil & gas royalty prices and volumes which rose 31.6% and 33.1%. Compared to the prior year period, consolidated revenues increased 51.3% to $628.4 million.
Updating estimates. We have made several adjustments to our model to reflect updated 2022 guidance, along with estimated distributions to and undistributed earnings attributable to participating securities. We have lowered our 2022 EBITDA and adjusted EPU estimates to $919.1 million and $4.48, respectively, from $945.3 million and $4.85. We lifted our 2023 EPU and EBITDA estimates to $5.85 and $1.116 billion, respectively, from $5.75 and $1.077 billion. Looking ahead to 2023, Alliance expects to boost coal sales by roughly two million tons and expects coal pricing per ton to increase by roughly 10% compared to the 2022 average. Within the oil and gas royalty segment, volumes are expected to benefit from two recent acquisitions that added 1,200 producing wells, 101 wells to be completed and 98 permitted locations on the acquired acreage.
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 reported substantial increases to financial and operating results for the quarter ended September 30, 2022 (the “2022 Quarter”) compared to the quarter ended September 30, 2021 (the “2021 Quarter”). Total revenues in the 2022 Quarter increased 51.3% to a record $628.4 million compared to $415.4 million for the 2021 Quarter as a result of significantly higher coal sales revenues, which rose $188.3 million to $550.6 million, and oil & gas royalties revenues, which jumped 75.6% to $35.3 million. Coal sales revenues increased on the strength of record coal sales prices, which rose 40.5% in the 2022 Quarter to $59.94 per ton sold, and increased coal sales volumes, which were 8.1% higher compared to the 2021 Quarter. Oil & gas royalties revenue in the 2022 Quarter benefited from significantly higher volumes and sales price realizations per BOE, which increased 33.1% and 31.6%, respectively, compared to the 2021 Quarter. Total operating expenses increased to $450.3 million in the 2022 Quarter, compared to $348.7 million in the 2021 Quarter, due primarily to increased coal sales volumes and ongoing inflationary cost pressures. Net income for the 2022 Quarter increased 186.0% to $164.6 million, or $1.25 per basic and diluted limited partner unit, compared to $57.5 million, or $0.44 per basic and diluted limited partner unit, for the 2021 Quarter. EBITDA also increased 84.0% in the 2022 Quarter to $250.2 million compared to $135.9 million in the 2021 Quarter. (Unless otherwise noted, all references in the text of this release to “net income” refer to “net income attributable to ARLP.” For a definition of EBITDA and related reconciliation to its comparable GAAP financial measure throughout this release, please see the end of this release.)
Performance in the 2022 Quarter also improved compared to the quarter ended June 30, 2022 (the “Sequential Quarter”) as modest increases to coal sales volumes and pricing pushed both coal sales and total revenues higher by 3.5% and 1.9%, respectively. Increased revenues, partially offset by higher total operating expenses in the 2022 Quarter, led net income and EBITDA higher by 1.9% and 2.6%, respectively, both as compared to the Sequential Quarter.
Total revenues increased 55.6% to $1.71 billion for the nine months ended September 30, 2022 (the “2022 Period”), compared to $1.10 billion for the nine months ended September 30, 2021 (the “2021 Period”), primarily due to substantial increases in prices and volumes from both coal and oil & gas royalties. Higher revenues, partially offset by increased total operating and income tax expenses, led to significantly higher net income, which rose 187.1% to $362.7 million for the 2022 Period, or $2.76 per basic and diluted limited partner unit, compared to $126.3 million, or $0.97 per basic and diluted limited partner unit, for the 2021 Period. EBITDA increased 85.3% in the 2022 Period to $646.3 million compared to $348.9 million in the 2021 Period.
As previously announced on October 28, 2022, the Board of Directors of ARLP’s general partner (the “Board”) increased the cash distribution to unitholders for the 2022 Quarter to $0.50 per unit (an annualized rate of $2.00 per unit), payable on November 14, 2022, to all unitholders of record as of the close of trading on November 7, 2022. The announced distribution represents a 150.0% increase over the cash distribution of $0.20 per unit for the 2021 Quarter and a 25.0% increase over the cash distribution of $0.40 per unit for the Sequential Quarter.
“With energy market fundamentals remaining favorable during the 2022 Quarter, ARLP again delivered strong financial and operating performance, as we posted record quarterly total revenues and income from operations as well as significant increases to net income and EBITDA compared to the 2021 Quarter,” said Joseph W. Craft III, Chairman, President and Chief Executive Officer. “Higher coal sales and production volumes combined with record per ton price realizations drove our total Coal Segment Adjusted EBITDA up 77.8% to $224.6 million as margins per ton sold jumped $9.58 compared to the 2021 Quarter. Strong energy markets also continued to benefit our royalty businesses as increased volumes and commodity price realizations led to increased total royalty revenue and record Segment Adjusted EBITDA during the 2022 Quarter.”
Mr. Craft added, “ARLP was also able to execute new coal sales commitments for delivery of 5.6 million tons through 2025 at prices supporting higher margins in the future. With ARLP sold out for this year and solid contracted coal sales volumes in 2023 and 2024, we have good visibility into our ability to generate cash flow growth over the next several years. Reflecting our strong year-to-date performance and future expectations, ARLP’s Board elected to accelerate our previously planned increases to cash distributions to unitholders by declaring a $0.50 per unit distribution for the 2022 Quarter, as communicated last week.”
ARLP’s coal sales prices per ton increased significantly in both the Illinois Basin and Appalachia compared to the 2021 Quarter as improved price realizations in both the domestic and export markets drove coal sales prices higher by 35.9% and 45.7% in the Illinois Basin and Appalachia, respectively. Compared to the Sequential Quarter, coal sales price realizations improved as well. Increased domestic sales volumes drove coal sales volumes higher by 6.2% and 12.1% in the Illinois Basin and Appalachia, respectively, compared to the 2021 Quarter. Compared to the Sequential Quarter, Illinois Basin coal sales volumes increased 4.8% as a result of higher sales volumes at our Gibson South and Hamilton mines while coal sales volumes in Appalachia remained relatively consistent. ARLP ended the 2022 Quarter with total coal inventory of 1.4 million tons, representing an increase of 0.4 million tons compared to the end of the 2021 Quarter and a decrease of 0.2 million tons compared to the end of the Sequential Quarter.
Segment Adjusted EBITDA Expense per ton increased by 22.6% and 30.1% in the Illinois Basin and Appalachia, respectively, compared to the 2021 Quarter primarily as a result of ongoing inflationary pressures on numerous expense items, most notably labor-related expenses, supply and maintenance costs as well as increased sales-related expenses due to higher price realizations. Longwall moves at our Hamilton and Tunnel Ridge mines during the 2022 Quarter also contributed to higher per ton expenses compared to the 2021 Quarter. Compared to the Sequential Quarter, Segment Adjusted EBITDA Expense per ton in the Illinois Basin decreased 4.4% in the 2022 Quarter due to increased sales volumes, lower roof support expenses, higher recoveries at our Gibson South and Hamilton mines and a $6.5 million non-cash contingent accrual recorded in the Sequential Quarter related to our 2015 purchase of the Hamilton mine. These decreases were partially offset by an extended longwall move at our Hamilton mine during the 2022 Quarter. In Appalachia, Segment Adjusted EBITDA Expense per ton increased 15.7% compared to the Sequential Quarter as a result of adverse mining conditions and preparation plant maintenance improvements at MC Mining, higher labor-related expenses and supply costs as well as a longwall move at our Tunnel Ridge mine in the 2022 Quarter. These increases were partially offset by lower sales-related expenses due to decreased price realizations and increased recoveries at our Mettiki and Tunnel Ridge mines.
Our Oil & Gas Royalties segment had significantly higher volumes and sales price realizations per BOE in the 2022 Quarter which drove Segment Adjusted EBITDA higher by 87.5% to a record $35.8 million compared to $19.1 million for the 2021 Quarter. Compared to the Sequential Quarter, Segment Adjusted EBITDA increased by 3.4% in the 2022 Quarter primarily due to higher oil & gas volumes, which rose by 10.4%, partially offset by lower price realizations, which decreased by 11.1%.
Segment Adjusted EBITDA for our Coal Royalties segment increased to $11.2 million, representing increases of 21.4% and 22.3% compared the 2021 and Sequential Quarters, respectively, as a result of increased royalty tons sold and higher average royalty rates per ton.
Outlook
“Assisted by the supply driven energy crisis the world has experienced this year, ARLP is on track to achieve record financial results in 2022,” said Mr. Craft. “Since we have not seen a meaningful supply response, we expect the global energy markets will continue to be favorable for the foreseeable future. Based upon this view and our current contracted coal sales volumes, we expect to add up to two million tons of Illinois basin production next year giving us confidence our Partnership’s 2023 financial results will grow beyond this year’s record performance. In the near term, inflation pressures and continuing transportation challenges are the most significant issues our coal operations and marketing teams are managing. Rail performance has recently improved but low water levels and lock outages have impacted both exports destined for the U.S. Gulf and domestic barge traffic. These potential shipping delays may lead us to defer some of this year’s contracted tons into early next year. We have therefore adjusted our expectations for 2022 coal sales volumes, prices and costs as noted in the updated guidance table below. Our oil & gas royalties segment continues to benefit from increased drilling and completion activity by operators on our acreage and we have adjusted volume expectations accordingly.”
Mr. Craft continued, “Since our last earnings call in July, ARLP continued to invest for future growth. In keeping with our objective of reinvesting cash flows generated by our oil & gas royalty segment, we recently closed two transactions totaling $94.5 million to acquire an additional 4,322 net oil & gas royalty acres in the Permian Basin. There are currently 1,200 producing wells, 101 wells to be completed and 98 permitted locations on the acquired acreage, providing ARLP with line of sight to future oil & gas production growth. To enhance our long-lived, efficient mining operations and to maximize cash flow from our existing coal assets, we recently committed to access a resource area containing approximately 110 million tons adjacent to our River View mine allowing us to produce from a more productive, higher yield coal seam area and capture the opportunity to fully utilize existing infrastructure at this operation. In addition, during the 2022 Quarter, we added 69 million tons of lower cost, lower sulfur coal adjacent to our low-cost Tunnel Ridge longwall mine. We expect both of these investments will payout on cost savings alone and also give us the opportunity to add tons beyond 2024 to meet market demand, if available. Finally, ARLP recently elected to hold its commitment to Francis Energy at its initial $20 million convertible note investment. We remain interested in the EV infrastructure market and continue to evaluate opportunities in the industry to create value potential for ARLP.”
Mr. Craft concluded, “These are exciting times for ARLP. We believe our current core businesses are well positioned to deliver significant cash flows for some time to come, allowing ARLP to provide attractive cash returns to unitholders, effectively manage our balance sheet and invest in new opportunities to create long-term value for all of our stakeholders.”
ARLP’s updated full year 2022 guidance is outlined below:
A conference call regarding ARLP’s 2022 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 http://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 13733069.
About Alliance Resource Partners, L.P.
ARLP is a diversified energy company that is currently the largest coal producer in the eastern United States. 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 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.
News, unit prices and additional information about ARLP, including filings with the Securities and Exchange Commission (“SEC”), are available at http://www.arlp.com. For more information, contact the investor relations department of ARLP at (918) 295-7674 or via e-mail at investorrelations@arlp.com.
The statements and projections used throughout this release are based on current expectations. These statements and projections are forward-looking, and actual results may differ materially. These projections do not include the potential impact of any mergers, acquisitions or other business combinations that may occur after the date of this release. We have included more information below regarding business risks that could affect our results.
FORWARD-LOOKING STATEMENTS: With the exception of historical matters, any matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projected results. Those forward-looking statements include expectations with respect to 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, among others. These risks to our ability to achieve these outcomes include, but are not limited to, the following: the outcome or escalation of current hostilities in Ukraine, the severity, magnitude, and duration of the COVID-19 pandemic and the emergence of new virus variants, including impacts of the pandemic and of businesses’ and governments’ responses to the pandemic, including actions to mitigate its impact and the development of treatments and vaccines, 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; changes in macroeconomic and market conditions and market volatility arising from hostilities in Ukraine, including inflation, changes in coal, oil, natural gas, and natural gas liquids prices, and the impact of such changes and volatility on our financial position; 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 global economic and geo-political conditions or in industries in which we or our customers operate; changes in coal prices and/or oil & gas prices, demand and availability which could affect our operating results and cash flows; 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 mineral interests due to low oil, natural gas, and natural gas liquid 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; our ability to identify and invest in new energy and infrastructure transition ventures; the success of our development plans for our wholly owned subsidiary, MatrixDesign Group, LLC, and our investments in emerging infrastructure and technology companies; dependence on significant customer contracts, including renewing existing contracts upon expiration; adjustments made in price, volume, or terms to existing coal supply agreements; the effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; the effects of and changes in taxes or tariffs and other trade measures adopted by the United States and foreign governments; legislation, regulations, and court decisions and interpretations thereof, both domestic and foreign, including those relating to the environment and the release of greenhouse gases, mining, miner health and safety, hydraulic fracturing, and health care; deregulation of the electric utility industry or the effects of any adverse change in the coal industry, electric utility industry, or general economic conditions; investors’ and other stakeholders’ increasing attention to environmental, social and governance matters; liquidity constraints, including those resulting from any future unavailability of financing; customer bankruptcies, cancellations or breaches to existing contracts, or other failures to perform; customer delays, failure to take coal under contracts or defaults in making payments; our productivity levels and margins earned on our coal sales; disruptions to oil & gas exploration and production operations at the properties in which we hold mineral interests; changes in equipment, raw material, service or labor costs or availability, including due to inflationary pressures; changes in our ability to recruit, hire and maintain labor, including as a result of the potential impact of government-imposed vaccine mandates; 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 shortages 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, 2021, filed on February 25, 2022 and amended on August 26, 2022, and ARLP’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022, filed on May 9, 2022 and August 8, 2022, respectively. Except as required by applicable securities laws, ARLP does not intend to update its forward-looking statements.
Reconciliation of GAAP “net income attributable to ARLP” to non-GAAP “EBITDA” and “Distributable Cash Flow” (in thousands).
EBITDA is defined as net income attributable to ARLP before net interest expense, income taxes and depreciation, depletion and amortization. Distributable cash flow (“DCF”) is defined as EBITDA excluding interest expense (before capitalized interest), interest income, income taxes and estimated maintenance capital expenditures. Distribution coverage ratio (“DCR”) is defined as DCF divided by distributions paid to partners.
Management believes that the presentation of such additional financial measures provides useful information to investors regarding our performance and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) provide additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions and (iii) present measurements that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations.
EBITDA, DCF and DCR should not be considered as alternatives to net income attributable to ARLP, net income, income from operations, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. EBITDA and DCF are not intended to represent cash flow and do not represent the measure of cash available for distribution. Our method of computing EBITDA, DCF and DCR may not be the same method used to compute similar measures reported by other companies, or EBITDA, DCF and DCR may be computed differently by us in different contexts (i.e. public reporting versus computation under financing agreements).
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 and other expense. Transportation expenses are excluded as these expenses are passed through to our customers and, consequently, we do not realize any margin on transportation revenues. Segment Adjusted EBITDA Expense is used as a supplemental financial measure by our management to assess the operating performance of our segments. Segment Adjusted EBITDA Expense is a key component of EBITDA 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 excludes expenses of our Oil & Gas Royalties segment and is adjusted for intercompany interactions with our Coal Royalties 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 excludes the contribution of our Oil & Gas and Coal Royalties segments to allow management to focus solely on the operating performance of our Illinois Basin and Appalachia segments.
Brian L. Cantrell Alliance Resource Partners, L.P. (918) 295-7673
TULSA, Okla.–(BUSINESS WIRE)– Alliance Resource Partners, L.P. (NASDAQ: ARLP) today announced that the Board of Directors of ARLP’s general partner approved an increased cash distribution to its unitholders for the quarter ended September 30, 2022 (the “2022 Quarter”).
ARLP unitholders will receive a cash distribution for the 2022 Quarter of $0.50 per unit (an annualized rate of $2.00 per unit), payable on November 14, 2022 to all unitholders of record as of the close of trading on November 7, 2022. The announced distribution represents a 150.0% increase over the cash distribution of $0.20 per unit for the quarter ended September 30, 2021 and a 25.0% increase over the cash distribution of $0.40 per unit for the quarter ended June 30, 2022.
As previously announced, ARLP will report financial results for the 2022 Quarter before the market opens on Monday, October 31, 2022 and 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 http://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 13733069.
This announcement is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership’s distributions to foreign investors attributable to gross income, gain or loss that is effectively connected with a United States trade or business. Accordingly, ARLP’s distributions to foreign investors are subject to federal income tax withholding at the highest applicable tax rate.
About Alliance Resource Partners, L.P.
ARLP is a diversified energy company that is currently the largest coal producer in the eastern United States. 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 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.
News, unit prices and additional information about ARLP, including filings with the Securities and Exchange Commission (“SEC”), are available at http://www.arlp.com. For more information, contact the investor relations department of ARLP at (918) 295-7674 or via e-mail at investorrelations@arlp.com.
Brian L. Cantrell Alliance Resource Partners, L.P. (918) 295-7673
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, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Updating estimates. Coal prices continued to exhibit strength during the third quarter and we believe the outlook for oil and gas prices remains favorable. We have increased our 2022 adjusted EBITDA and adjusted EPU estimates to $951.9 million and $4.90 from $945.3 and $4.85, respectively. Our 2023 estimates remain unchanged. We have assumed the partnership declares third and fourth quarter per unit cash distributions of $0.45 and $0.50, respectively.
New Ventures team. Alliance recently announced the formation of a New Ventures team, led by Andrew Woodward and Matthew Lewis, to make strategic investments in energy and infrastructure that promote decarbonization. The team will identify, develop, and execute commercial opportunities outside of the company’s existing businesses to enhance growth and the company’s ability to serve the evolving energy needs of the market.
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) will report its third quarter 2022 financial results before the market opens on Monday, October 31, 2022. 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 information” section of ARLP’s website at http://www.arlp.com.
An audio replay of the conference call will be available for approximately one week. To access the audio replay, dial U.S. Toll Free (844) 512-2921; International Toll (412) 317-6671 and request to be connected to replay using access code 13733069.
About Alliance Resource Partners, L.P.
ARLP is a diversified energy company that is currently the largest coal producer in the Eastern United States. 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 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.
News, unit prices and additional information about ARLP, including filings with the Securities and Exchange Commission (“SEC”), are available at http://www.arlp.com. For more information, contact the investor relations department of ARLP at (918) 295-7674 or via e-mail at investorrelations@arlp.com.
Brian L. Cantrell Alliance Resource Partners, L.P. (918) 295-7673
