Alliance Resource Partners (ARLP) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $593.4 million, net income $100.2 million ($0.77/unit), and adjusted EBITDA ranged from $177.7 million to $202 million, all down year-over-year due to lower coal sales volumes and higher costs, partially offset by higher realized prices.

• Oil & gas royalty segment volumes rose 6.8% year-over-year to 817,000 BOE, with segment EBITDA up 7.6%.

• Issued $400 million of 8.625% senior unsecured notes due 2029, redeemed $284.6 million of 2025 notes, and extended $425 million revolver to 2028, boosting liquidity and balance sheet strength.

• Free cash flow for Q2 was $114.9 million, liquidity increased to $666 million, including $203.7 million in cash.

• Declared Q2 cash distribution of $0.70 per unit ($2.80 annualized), consistent with prior quarters.

Financial highlights

• Q2 2024 consolidated revenues were $593.4 million, down 7.6% year-over-year and 9% sequentially, mainly due to an 11.8% decrease in coal sales volumes, partially offset by a 3.8% increase in average coal sales price per ton.

• Operating expenses rose to $475.9 million in Q2 2024, driven by higher per ton costs and increased outside coal purchases.

• Segment-adjusted EBITDA expense per ton sold increased 5.5% in Illinois Basin and 57.6% in Appalachia year-over-year, driven by lower production and challenging mining conditions.

• Oil & Gas Royalties segment Adjusted EBITDA grew 7.6% to $31.3 million in Q2 2024, driven by higher volumes and prices.

• Free cash flow for Q2 was $114.9 million, down from $151.7 million year-over-year.

Outlook and guidance

• 2024 coal sales volume guidance lowered to 33.5–34.5 million tons (midpoint 34 million, 2.6% below prior midpoint); Illinois Basin: 24.25–25 million tons, Appalachia: 9.25–9.5 million tons.

• Sales price per ton guidance raised to $63.75–$64.50; Illinois Basin: $56.25–$57, Appalachia: $83–$84.

• Segment-adjusted EBITDA expense per ton now $43–$45 (was $41–$43); maintenance CapEx guidance lowered to $395–$430 million.

• Oil and gas royalty segment guidance raised: oil 1.5–1.6 million bbl, gas 5.8–6.2 million MCF, liquids 750,000–800,000 bbl.

• Management anticipates sufficient cash flow to meet 2024 requirements, including capital expenditures, debt payments, and distributions.