Alliance Resource Partners, L.P. (ARLP): history, ownership, mission, how it works & makes money

A Brief History of Alliance Resource Partners, L.P.

Alliance Resource Partners, L.P. (ARLP), a publicly traded limited partnership based in Tulsa, Oklahoma, is a leading producer and marketer of coal to major U.S. electricity generators and industrial end-users. As of 2024, ARLP operates through its subsidiary, Alliance Coal, LLC, and has a diverse portfolio of mining operations in the Illinois Basin and Appalachia regions.

Financial Performance in 2024

For the third quarter of 2024, ARLP reported total revenues of $613.6 million, a decrease of 3.6% from $636.5 million in the third quarter of 2023. This decline was primarily due to reduced coal sales prices, which fell by 2.1% due to lower export pricing and decreased transportation revenues. The net income for the quarter was $86.3 million, or $0.66 per unit, down from $153.7 million, or $1.18 per unit in the prior year. EBITDA for the quarter was $170.7 million, compared to $227.6 million in the same quarter of 2023.

Annual Financial Overview

For the nine months ended September 30, 2024, ARLP's total revenues were $1.86 billion, down 4.3% from $1.94 billion during the same period in 2023. The net income attributable to ARLP for the 2024 period was $344.5 million, or $2.64 per unit, compared to $514.7 million, or $3.93 per unit in 2023. The EBITDA for the nine-month period was $583.4 million, down from $747.7 million in 2023.

Operational Highlights

As of September 30, 2024, ARLP reported coal sales volumes of 8.379 million tons, a slight decrease of 0.9% from 8.456 million tons in the previous quarter, but an increase of 6.7% from 7.851 million tons sold in the same quarter of 2023. The average coal sales price per ton sold was $63.57, down 2.1% from $64.94 in Q3 2023.

Balance Sheet and Liquidity

As of September 30, 2024, ARLP had total debt and finance leases outstanding of $497.4 million, including $400 million in recently issued Senior Notes due in 2029. The partnership's total and net leverage ratios were 0.64x and 0.39x respectively, based on trailing twelve months Adjusted EBITDA. ARLP ended the quarter with total liquidity of $657.7 million, comprising $195.4 million of cash and cash equivalents and $462.3 million available under its revolving credit and accounts receivable securitization facilities.

Distributions

ARLP's Board of Directors declared a cash distribution of $0.70 per unit for the 2024 Quarter, consistent with previous distributions. This distribution translates to an annualized rate of $2.80 per unit and is payable on November 14, 2024.

Outlook and Market Dynamics

Looking forward, ARLP continues to adapt to market dynamics, particularly in response to federal regulations affecting grid reliability and the increasing demand from sectors such as AI and manufacturing. The company is actively finalizing contracts for 21.7 million tons over the 2025-2030 period, which will enhance its domestic sales order book. The long-term outlook remains positive with a focus on coal demand fundamentals and growth in the oil and gas royalty segment.

A Who Owns Alliance Resource Partners, L.P. (ARLP)

Ownership Structure

As of 2024, Alliance Resource Partners, L.P. (ARLP) has a diverse ownership structure comprising institutional investors, individual shareholders, and company executives. The largest shareholders include:

Financial Performance Overview

In the third quarter of 2024, ARLP reported total revenues of $613.6 million, a decrease of 3.6% compared to the same quarter in 2023. The net income for the quarter was $86.3 million, or $0.66 per basic and diluted limited partner unit, down from $153.7 million, or $1.18 per unit in Q3 2023. The EBITDA for the quarter was $170.7 million compared to $227.6 million in the previous year.

Distribution and Cash Flow

ARLP declared a quarterly cash distribution of $0.70 per unit for Q3 2024, which annualizes to $2.80 per unit. The distribution is consistent with the previous quarters. The distributable cash flow for Q3 2024 was $97.6 million, with distributions paid to partners totaling $90.7 million.

Debt and Liquidity Position

As of September 30, 2024, ARLP had total debt and finance leases outstanding of $497.4 million. The company reported a total liquidity of $657.7 million, which included $195.4 million in cash and cash equivalents alongside $462.3 million available under revolving credit facilities.

Alliance Resource Partners, L.P. (ARLP) Mission Statement

Company Overview

Alliance Resource Partners, L.P. (ARLP) is a leading coal producer in the eastern United States and engages in various operations related to coal and oil & gas royalties. The company aims to provide reliable and affordable energy while actively pursuing growth in its oil and gas segments.

Mission Statement

As of 2024, ARLP's mission statement emphasizes its commitment to delivering high-quality energy solutions, maintaining operational excellence, and enhancing shareholder value through strategic growth initiatives in both coal and oil & gas sectors.

Financial Performance Indicators

The financial performance of ARLP is crucial in evaluating its effectiveness in fulfilling its mission. Below are key financial metrics from the third quarter of 2024:

Operational Highlights

ARLP has made significant strides in its operational efficiency, which is reflected in its coal sales volumes and royalty earnings. Key operational highlights include:

• Total coal sales volumes increased by 6.7% compared to the sequential quarter.
• Oil & gas royalty volumes rose to 864 MBOE, marking an 11.9% increase year-over-year.
• Completion of $10.5 million in oil & gas mineral interest acquisitions.
• Segment Adjusted EBITDA Expense per ton increased to $46.11, an 11.9% rise year-over-year.

Market Position and Strategy

ARLP's strategic focus includes:

• Enhancing coal production capabilities in the Illinois Basin and Appalachia regions.
• Expanding oil and gas royalties, particularly in the Permian Basin.
• Committing to sustainable practices and reducing operational costs.
• Maintaining a robust distribution strategy to ensure shareholder returns.

Financial Health Metrics

As of September 30, 2024, ARLP's balance sheet reflects its financial health:

Outlook

Looking forward, ARLP plans to capitalize on market dynamics and customer demand. The company expects total sales tons for 2024 to range between 33.50 million and 34.50 million, with a focus on increasing both coal and oil & gas production to enhance its market position.

ARLP's mission is not only about providing energy but also about evolving as a key player in the energy sector, ensuring sustainable growth and shareholder returns in a changing market landscape.

How Alliance Resource Partners, L.P. (ARLP) Works

Financial Overview

Total revenues for the third quarter of 2024 were $613.6 million, a decrease of 3.6% compared to $636.5 million in the same quarter of 2023. The net income for the quarter was $86.3 million, or $0.66 per basic and diluted limited partner unit, compared to $153.7 million, or $1.18 per unit in Q3 2023. EBITDA for this quarter was $170.7 million, down from $227.6 million in Q3 2023.

Revenue Breakdown

For the 2024 year-to-date period, total revenues decreased by 4.3% to $1.86 billion compared to $1.94 billion in the previous year. The net income for this period was $344.5 million, or $2.64 per unit, down from $514.7 million, or $3.93 per unit in the same period of 2023.

Coal Operations

Total coal sales volumes for Q3 2024 were 8.379 million tons, with a sales price per ton of $63.57. This reflects a 2.1% decrease in sales price compared to Q3 2023. The segment adjusted EBITDA expense per ton sold increased to $46.11, which is an 11.9% year-over-year increase.

Royalties Segment

In the oil and gas royalties segment, volumes sold increased to 864 MBOE, reflecting an 11.9% increase year-over-year. The average sales price per BOE for Q3 2024 was $39.87, a 9.8% decrease compared to Q3 2023.

Balance Sheet and Liquidity

As of September 30, 2024, total debt and finance leases outstanding were $497.4 million. The partnership's total liquidity was $657.7 million, consisting of $195.4 million in cash and cash equivalents and $462.3 million available under revolving credit facilities.

Distributions

ARLP announced a quarterly cash distribution of $0.70 per unit, which annualizes to $2.80 per unit. This distribution is consistent with previous quarters and will be paid on November 14, 2024.

Operational Guidance for 2024

For 2024, ARLP expects coal sales volumes in the Illinois Basin to be between 24.25 million and 25.0 million tons. For Appalachia, sales are projected to be between 9.25 million and 9.50 million tons.

How Alliance Resource Partners, L.P. (ARLP) Makes Money

Revenue Streams

Alliance Resource Partners, L.P. (ARLP) generates revenue primarily through two segments: coal operations and oil & gas royalties.

Coal Operations

In the third quarter of 2024, ARLP reported total coal sales of $532.6 million, a decrease from $549.1 million in the same quarter of 2023. The company sold 8.379 million tons of coal, with a sales price per ton of $63.57.

Coal sales in the Illinois Basin amounted to 5.967 million tons sold at an average price of $56.61, while Appalachia operations sold 2.412 million tons at an average price of $80.78.

Oil & Gas Royalties

ARLP's oil and gas segment generated $34.4 million in revenue for Q3 2024, with volumes sold reaching 864 MBOE, reflecting an increase of 11.9% compared to the same quarter in 2023. The average sales price per BOE was $39.87, down from $44.19 a year earlier.

Operating Expenses

ARLP's total operating expenses for Q3 2024 were $512.5 million, up from $471.1 million in Q3 2023. Major components included:

• Operating expenses (excluding depreciation, depletion, and amortization): $384.8 million
• Transportation expenses: $24.6 million
• General and administrative expenses: $21.9 million
• Depreciation, depletion, and amortization: $73.0 million

Net Income and EBITDA

In Q3 2024, ARLP reported net income of $86.3 million, or $0.66 per unit, down from $153.7 million, or $1.18 per unit in Q3 2023. EBITDA for the same quarter was $170.7 million, compared to $227.6 million in Q3 2023.

Distributions

For Q3 2024, ARLP declared a cash distribution of $0.70 per unit, maintaining an annualized rate of $2.80 per unit, consistent with the prior quarters.

Balance Sheet and Liquidity

As of September 30, 2024, ARLP had total debt outstanding of $497.4 million, with total liquidity of $657.7 million, including $195.4 million in cash and cash equivalents.

Article updated on 8 Nov 2024

Resources:

• Alliance Resource Partners, L.P. (ARLP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Alliance Resource Partners, L.P. (ARLP)' financial performance, including balance sheets, income statements, and cash flow statements.
• SEC Filings – View Alliance Resource Partners, L.P. (ARLP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.