Increased coal sales drives improved earnings for Tulsa firm

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“Year-to-date performance from all of ARLP’s business segments has exceeded our initial expectations for 2021.”

Alliance Resource Partners, L.P., the major coal-mining company based in Tulsa reported increased financial and operating results for the quarter ended September 30, 2021 compared to the previous quarter.

Primarily on the strength of increased coal sales volumes and price realizations, total revenues for the 2021 Quarter rose 14.6% to $415.4 million. Increased total revenues, partially offset by higher total operating expenses, drove net income for the 2021 Quarter up by 30.7% to $57.5 million, or $0.44 per basic and diluted limited partner unit, while EBITDA climbed 14.6% to $135.9 million.

Increased coal sales volumes and prices for the 2021 Quarter led coal sales revenues and Segment Adjusted EBITDA for our coal operating segments higher by 11.1% and 10.9%, respectively. Increased royalty volumes sold and higher sales prices for the 2021 Quarter also drove total royalty revenues and Segment Adjusted EBITDA for our royalties segments up by 18.5% and 27.6%, respectively. 

Financial and operating results for the 2021 Quarter and the nine months ended September 30, 2021 were also significantly improved compared to the quarter ended September 30, 2020 and the nine months ended September 30, 2020 , both of which were negatively impacted by reduced global energy demand and weak commodity prices as a result of lockdown measures imposed in response to the COVID-19 pandemic.

Total revenues in the 2021 Quarter increased by 16.8% to $415.4 million compared to $355.7 million in the 2020 Quarter as a result of higher coal sales volumes, which rose 10.3%, and significantly higher oil & gas prices.

Revenue growth, partially offset by increased total operating expenses, led net income higher by $30.3 million to $57.5 million for the 2021 Quarter, or $0.44 per basic and diluted limited partner unit, compared to $27.2 million, or $0.21 per basic and diluted limited partner unit, for the 2020 Quarter. EBITDA also increased 14.4% in the 2021 Quarter to $135.9 million compared to $118.8 million in the 2020 Quarter.

Results for the 2021 Period were also sharply higher compared to the 2020 Period as net income increased to $126.3 million, or $0.97 per basic and diluted limited partner unit, compared to a net loss of $164.2 million, or $(1.29) per basic and diluted limited partner unit, for the 2020 Period. The increase in net income resulted from higher revenues and lower depreciation in the 2021 Period and $157.0 million of non-cash impairment charges in the 2020 Period.

Excluding the impact of impairment charges, net income of $126.3 million for the 2021 Period compares to an Adjusted net loss of $7.2 million for the 2020 Period, while EBITDA increased 31.5% to $348.9 million in the 2021 Period compared to Adjusted EBITDA of $265.3 million in the 2020 Period. Increased coal sales volumes and oil & gas prices in the 2021 Period drove total revenues higher by 14.0% to $1.10 billion, compared to $961.6 million for the 2020 Period.

ARLP also announced that the Board of Directors of its general partner declared a cash distribution to unitholders of $0.20 per unit (an annualized rate of $0.80 per unit) for the 2021 Quarter, payable on November 12, 2021 to all unitholders of record as of the close of trading on November 5, 2021. The announced distribution represents a 100.0% increase over the cash distribution of $0.10 per unit for the Sequential Quarter.

“ARLP’s strong performance this year continued during the 2021 Quarter as we again posted sequential increases to total revenues, net income, EBITDA and free cash flow,” said Joseph W. Craft III, Chairman, President and Chief Executive Officer. “Reflecting robust demand, coal sales volumes and price realizations increased by 650,000 tons and $1.10 per ton, respectively, over the Sequential Quarter and ARLP continued to add commitments to its coal contract book, entering into new agreements for the delivery of approximately 15.3 million tons over the balance of this year through 2024.”

 

Mr. Craft continued, “Year-to-date performance from all of ARLP’s business segments has exceeded our initial expectations for 2021. Since the beginning of the year, ARLP has generated $222.3 million of free cash flow, reduced total debt and finance lease obligations by $156.9 million, committed $40.8 million to attractive growth investments, increased liquidity by $110.2 million and improved total leverage to 0.95 times. Based on these results, favorable market fundamentals and expectations for continued strong performance through next year, our Board elected to support management’s view that a significant increase to ARLP’s cash distribution to unitholders was appropriate.”

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