Alliance Resource Partners (NASDAQ: NASDAQ:ARLP) reported a slight increase in total revenues for Q3 2023, reaching $636.5 million, up from $632.5 million in the same quarter last year. Despite the revenue increase, net income for the quarter was down 8.4% year-over-year, standing at $153.7 million. The company also noted a decrease in coal production and sales volumes, while coal sales price per ton and coal royalty revenue per ton saw increases.
Key takeaways from the call include:
- Coal sales price per ton rose to $64.94, an 8.3% increase compared to the previous year.
- Coal production and sales volumes decreased by 7% and 7.9% respectively.
- Coal royalty revenue per ton increased by 13.5%.
- Oil and gas royalties’ average realized sales prices were down 31.2% per barrel of oil equivalent.
- The company generated $123.7 million of free cash flow in the quarter, with total liquidity standing at $629.5 million.
- ARLP paid a quarterly distribution of $0.70 per unit and reduced its outstanding senior notes balance by $54.6 million.
ARLP has slightly adjusted its full-year 2023 coal sales volumes and pricing forecasts. The company expects coal sales volumes for 2023 to range between 34.5 to 35 million tons. The outlook for average coal price realizations for 2023 has been adjusted to a new range of $64.50 to $66 per ton, with the segment-adjusted EBITDA expense per ton revised to $39.50 to $40.50.
During the earnings call, CEO Joe Craft stated that the company anticipates coal consumption in the U.S. domestic market in 2024 to remain similar to 2023 levels, despite rising natural gas prices. Craft also expressed the company's expectation of increased sales in the export market and plans to refinance senior notes to free up capital for future investments.
The company also announced investments in Ascend Elements, a sustainable battery materials manufacturer, and Infinitum, a high-efficiency electric motor developer, as part of their plans to expand their footprint in the battery recycling industry. They expect these investments to provide significant cash flow and anticipate record production volumes in 2024.
Craft also provided updates on the company's logistical challenges related to export shipments, equipment repairs, and labor issues at their mines. He mentioned that the regulatory environment remains uncertain, but there is a growing recognition of the need for reliability in electricity generation. The next earnings call is expected to take place in January.
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