Alliance Resource Partners, L.P. (NASDAQ: ARLP) ("ARLP" or the "Partnership") today reported increased financial and operating results for the quarter ended June 30, 2023 (the "2023 Quarter") compared to the quarter ended June 30, 2022 (the "2022 Quarter"). Total revenues in the 2023 Quarter increased 3.5% to $641.8 million compared to $619.9 million for the 2022 Quarter driven primarily by higher coal sales price per ton, which rose by 5.7%, partially offset by lower oil & gas royalty prices. Increased revenues, partially offset by higher total operating expenses, led to net income for the 2023 Quarter of $169.8 million, or $1.30 per basic and diluted limited partner unit, compared to $163.5 million, or $1.23 per basic and diluted limited partner unit, for the 2022 Quarter. (Unless otherwise noted, all references in the text of this release to "net income" refer to "net income attributable to ARLP.")
Compared to the quarter ended March 31, 2023 (the "Sequential Quarter"), total revenues in the 2023 Quarter decreased by 3.2% primarily as a result of lower average coal sales prices of $62.93 per ton sold compared to $68.34 per ton sold in the Sequential Quarter, partially offset by higher coal sales volumes, which rose 5.1% to 8.9 million tons sold in the 2023 Quarter. Lower revenues contributed to a reduction in net income and EBITDA of 11.2% and 8.0%, respectively, compared to the Sequential Quarter. (For a definition of EBITDA and related reconciliation to its comparable GAAP financial measure, please see the end of this release.)
Financial and operating results for the six months ended June 30, 2023 (the "2023 Period") increased compared to the six months ended June 30, 2022 (the "2022 Period"). Coal sales prices and coal sales revenues during the 2023 Period were higher by 21.8% and 23.8%, respectively, compared to the 2022 Period. Increased revenues and lower income tax expense, partially offset by higher total operating expenses, in the 2023 Period drove net income higher by 79.0% and EBITDA increased 29.6%, both as compared to the 2022 Period.
CEO Commentary
"ARLP delivered solid results during the second quarter of 2023, keeping us on track to deliver record financial results this year," commented Joseph W. Craft III, Chairman, President and Chief Executive Officer. "Continued strength in our contract book positioned our coal operations to achieve higher realized pricing per ton sold and Segment Adjusted EBITDA relative to the 2022 Quarter and the 2022 Period. Our year-to-date results have been impressive despite coal demand, both domestically and globally, being lower than we expected entering this year, due to slower economic growth, mild weather in our targeted markets, and lower natural gas prices."
Mr. Craft added, "Recent reports of sustained, record heat in many parts of the U.S. should once again emphasize our nation’s critical need for a reliable, affordable, and diverse energy mix. Markets can turn quickly in response to moderate swings in demand, particularly when supply remains constrained and policy decisions impact reliability. Our operations continue to provide a low-cost, secure source of supply for our customers, and with our recent actions to further strengthen our balance sheet, we expect to do so well into the future."
Segment Results and Analysis
% Change | |||||||||||||||
2023 Second | 2022 Second | Quarter / | 2023 First | % Change | |||||||||||
(in millions, except per ton and per BOE data) | Quarter | Quarter | Quarter | Quarter | Sequential | ||||||||||
Coal Operations (1) | |||||||||||||||
Illinois Basin Coal Operations | |||||||||||||||
Tons sold | 6.066 | 5.831 | 4.0 | % | 6.190 | (2.0) | % | ||||||||
Coal sales price per ton sold | $ | 54.70 | $ | 49.80 | 9.8 | % | $ | 54.43 | 0.5 | % | |||||
Segment Adjusted EBITDA Expense per ton | $ | 35.39 | $ | 33.39 | 6.0 | % | $ | 33.45 | 5.8 | % | |||||
Segment Adjusted EBITDA | $ | 119.6 | $ | 97.4 | 22.8 | % | $ | 132.0 | (9.4) | % | |||||
Appalachia Coal Operations | |||||||||||||||
Tons sold | 2.838 | 3.102 | (8.5) | % | 2.279 | 24.5 | % | ||||||||
Coal sales price per ton sold | $ | 80.52 | $ | 77.83 | 3.5 | % | $ | 106.13 | (24.1) | % | |||||
Segment Adjusted EBITDA Expense per ton | $ | 42.04 | $ | 37.84 | 11.1 | % | $ | 55.20 | (23.8) | % | |||||
Segment Adjusted EBITDA | $ | 109.6 | $ | 124.4 | (11.9) | % | $ | 116.6 | (6.0) | % | |||||
Total Coal Operations | |||||||||||||||
Tons sold | 8.904 | 8.933 | (0.3) | % | 8.469 | 5.1 | % | ||||||||
Coal sales price per ton sold | $ | 62.93 | $ | 59.53 | 5.7 | % | $ | 68.34 | (7.9) | % | |||||
Segment Adjusted EBITDA Expense per ton | $ | 37.85 | $ | 35.12 | 7.8 | % | $ | 39.66 | (4.6) | % | |||||
Segment Adjusted EBITDA | $ | 226.2 | $ | 220.2 | 2.7 | % | $ | 245.7 | (7.9) | % | |||||
Royalties (1) | |||||||||||||||
Oil & Gas Royalties (4) | |||||||||||||||
BOE sold (2) | 0.765 | 0.544 | 40.6 | % | 0.759 | 0.8 | % | ||||||||
Oil percentage of BOE | 45.2 | % | 43.4 | % | 4.1 | % | 47.3 | % | (4.4) | % | |||||
Average sales price per BOE (3) | $ | 43.27 | $ | 72.31 | (40.2) | % | $ | 45.42 | (4.7) | % | |||||
Segment Adjusted EBITDA Expense | $ | 3.6 | $ | 3.6 | (0.6) | % | $ | 4.4 | (19.5) | % | |||||
Segment Adjusted EBITDA | $ | 29.1 | $ | 37.6 | (22.8) | % | $ | 30.0 | (3.3) | % | |||||
Coal Royalties | |||||||||||||||
Royalty tons sold | 5.118 | 5.268 | (2.8) | % | 5.057 | 1.2 | % | ||||||||
Revenue per royalty ton sold | $ | 3.24 | $ | 2.76 | 17.4 | % | $ | 3.07 | 5.5 | % | |||||
Segment Adjusted EBITDA Expense | $ | 5.6 | $ | 5.4 | 3.7 | % | $ | 5.4 | 3.9 | % | |||||
Segment Adjusted EBITDA | $ | 11.0 | $ | 9.1 | 20.2 | % | $ | 10.1 | 8.3 | % | |||||
Total Royalties (4) | |||||||||||||||
Total royalty revenues | $ | 50.0 | $ | 54.5 | (8.3) | % | $ | 51.1 | (2.1) | % | |||||
Segment Adjusted EBITDA Expense | $ | 9.2 | $ | 9.0 | 2.0 | % | $ | 9.8 | (6.7) | % | |||||
Segment Adjusted EBITDA | $ | 40.0 | $ | 46.8 | (14.4) | % | $ | 40.2 | (0.4) | % | |||||
