Alliance Resource Partners reports record coal sales prices and revenues
Wednesday, November 2nd, 2022
Alliance Resource Partners, L.P. has reported substantial increases to financial and operating results for the quarter ended 30 September 2022 compared to the quarter ended 30 September 2021.
Total revenues in the 2022 quarter increased 51.3% to a record US$628.4 million, compared to US$415.4 million for the 2021 quarter, as a result of significantly higher coal sales revenues, which rose US$188.3 million to US$550.6 million, and oil & gas royalties revenues, which jumped 75.6% to US$35.3 million.
Coal sales revenues increased on the strength of record coal sales prices, which rose 40.5% in the 2022 quarter to US$59.94/t 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 realisations per BOE, which increased 33.1% and 31.6%, respectively, compared to the 2021 quarter.
Total operating expenses increased to US$450.3 million in the 2022 quarter, compared to US$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 US$164.6 million, or US$1.25 per basic and diluted limited partner unit, compared to US$57.5 million, or US$0.44 per basic and diluted limited partner unit, for the 2021 quarter. EBITDA also increased 84.0% in the 2022 quarter to US$250.2 million compared to US$135.9 million in the 2021 quarter.
Performance in the 2022 quarter also improved compared to the quarter ended 30 June 2022 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 US$1.71 billion for the nine months ended 30 September 2022, compared to US$1.10 billion for the nine months ended 30 September 2021, 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 US$362.7 million for the 2022 period, or US$2.76 per basic and diluted limited partner unit, compared to US$126.3 million, or US$0.97 per basic and diluted limited partner unit, for the 2021 Period. EBITDA increased 85.3% in the 2022 Period to US$646.3 million compared to US$348.9 million in the 2021 Period.
The Board of Directors of ARLP’s general partner increased the cash distribution to unitholders for the 2022 quarter to US$0.50 per unit (an annualised rate of US$2.00 per unit), payable on 14 November 2022, to all unitholders of record as of the close of trading on 7 November 2022. The announced distribution represents a 150.0% increase over the cash distribution of US$0.20 per unit for the 2021 quarter and a 25.0% increase over the cash distribution of US$0.40 per unit for the Sequential quarter.
Joseph W. Craft III, Chairman, President and Chief Executive Officer, comments:
“With energy market fundamentals remaining favourable 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.
“Higher coal sales and production volumes combined with record per ton price realizations drove our total Coal Segment Adjusted EBITDA up 77.8% to US$224.6 million as margins per tonne sold jumped US$9.58 compared to the 2021 quarter. Strong energy markets also continued to benefit our royalty businesses as increased volumes and commodity price realisations led to increased total royalty revenue and record Segment Adjusted EBITDA during the 2022 quarter.
“ARLP was also able to execute new coal sales commitments for delivery of 5.6 million t 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 US$0.50 per unit distribution for the 2022 quarter, as communicated last week.”