Strong coal quarter reported by Alliance Resource Partners

Coal For Thee, But Not For Me

 

Who says the coal industry is dying? Tula-based Alliance Resource Partners, L.P. on Monday reported increased financial and operating results for the quarter and year ended December 31, 2021 as compared to the quarter and year ended December 31, 2020.

The company said its 2021 quarter net income grew 48% to $51.8 million or 40 cents a basic and diluted limited partner unit. The income compared to $35 million and 27 cents a share for the 2020 quarter.

Total revenues in the 2021 Quarter increased 29.2% to $473.5 million compared to $366.5 million in the 2020 Quarter as a result of higher coal sales volumes and prices, which rose 12.7% and 5.6%, respectively, as well as significantly higher oil & gas prices, which increased by 93.1%. Total operating expenses increased to $300.5 million in the 2021 Quarter, compared to $222.1 million in the 2020 Quarter, due to increased coal sales and production volumes, higher royalty and sales-related expenses as a result of increased coal price realizations, the impact of inflationary cost pressures and increased labor-related costs as certain mines worked overtime to meet customer demand.

Increased operating expenses in the 2021 Quarter also reflect an $11.8 million buy-out of a coal contract that enabled Alliance to make higher priced coal sales for delivery of tons through the first quarter of 2022 and $6.8 million of unfavorable year end non-cash actuarial and accrual adjustments. EBITDA also increased 7.3% in the 2021 Quarter to $130.2 million compared to $121.4 million in the 2020 Quarter.

Results for the 2021 Year were also sharply higher as net income increased to $178.2 million, or $1.36 per basic and diluted limited partner unit, compared to a net loss of $129.2 million, or $(1.02) per basic and diluted limited partner unit for the 2020 Year. The increase in net income resulted from higher revenues, lower Segment Adjusted EBITDA expense per ton and lower depreciation in the 2021 Year and $157.0 million of non-cash impairment charges in the 2020 Year.

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Excluding the impact of impairment charges, net income for the 2021 Year of $178.2 million was an increase of $150.4 million compared to Adjusted net income of $27.8 million for the 2020 Year, while EBITDA increased 23.9% to $479.1 million in the 2021 Year compared to Adjusted EBITDA of $386.7 million for the 2020 Year. Coal sales volumes increased 14.4% and oil & gas prices rose by 88.2% in the 2021 Year to drive total revenues higher by 18.2% to $1.57 billion, compared to $1.33 billion for the 2020 Year. (For definitions of Adjusted net income, Adjusted EBITDA and Segment Adjusted EBITDA Expense and related reconciliations to comparable GAAP financial measures, please see the end of this release.)

As previously announced on January 28, 2022, the Board of Directors of ARLP’s general partner declared a cash distribution to unitholders of $0.25 per unit (an annualized rate of $1.00 per unit) for the 2021 Quarter, payable on February 14, 2022, to all unitholders of record as of the close of trading on February 7, 2022. The announced distribution represents a 25.0% increase over the cash distribution of $0.20 per unit for the quarter ended September 30, 2021 (the “Sequential Quarter”).

“ARLP continued to benefit from favorable market conditions during the 2021 Quarter, posting significant increases over the 2020 Quarter to coal and oil & gas sales volumes, total revenues, net income and EBITDA,” said Joseph W. Craft III, Chairman, President and Chief Executive Officer.

He said the company worked overtime to meet contractual commitments and increase coal sales volumes by 606,000 tons.

Craft said with new agreements, Alliance entered 2022 with approximately 89% of its anticipated coal sales volumes priced and committed.

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