Alliance Resource Partners LP (ARLP) Q3 2024 Earnings Call Highlights: Navigating Challenges ...

GuruFocus News
4 min read

In This Article:

  • Total Revenue: $613.6 million, down 3.6% year-over-year.

  • Net Income: $86.3 million or $0.66 per unit, compared to $153.7 million or $1.18 per unit in the prior year.

  • Adjusted EBITDA: $170.4 million, down from $227.6 million in the prior year period.

  • Coal Sales Volumes: 8.4 million tons, up 6.7% sequentially.

  • Coal Production: 7.8 million tons, down 7.2% year-over-year.

  • Coal Sales Price per Ton: $63.57, down 2.1% year-over-year.

  • Segment Adjusted EBITDA Expense per Ton Sold: $46.11, up 11.9% year-over-year.

  • Oil & Gas Royalty Volumes: 864,000 BOE, up 11.9% year-over-year.

  • Cash Flow from Operating Activities: $209.3 million.

  • Capital Expenditures: $110.3 million.

  • Quarterly Distribution: $0.70 per unit.

  • Liquidity: $657.7 million, including $195.4 million in cash.

Release Date: October 28, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Alliance Resource Partners LP (NASDAQ:ARLP) reported a 6.7% increase in total coal sales shipments and an 11.9% increase in domestic coal sales shipments from the previous quarter.

  • The company successfully reduced its coal inventory by over 500,000 tons, with expectations to further decrease to a target range of 500,000 to 1 million tons by year-end.

  • ARLP's Oil & Gas Royalty segment saw a 11.9% year-over-year increase in volumes, driven by new well activity in the Permian Basin.

  • The company is making significant progress on capital and infrastructure projects, which are expected to improve productivity and reduce costs starting in early 2025.

  • ARLP increased its committed tonnage for 2025 by 5.9 million tons, with significant contracting activity from domestic customers, indicating strong future demand.

Negative Points

  • Persistently low natural gas prices and low export market activity negatively impacted ARLP's coal operations during the third quarter of 2024.

  • Coal sales price per ton sold decreased by 2.1% year-over-year and 2.6% sequentially, primarily due to lower Appalachia volumes and pricing.

  • Segment adjusted EBITDA expense per ton sold increased by 11.9% year-over-year, indicating rising operational costs.

  • Net income for the quarter was $86.3 million, a significant decrease from $153.7 million in the same period last year.

  • ARLP's consolidated revenue decreased by 3.6% year-over-year, reflecting lower revenues and higher total operating costs.

Q & A Highlights

Q: Can you provide an update on the full-year guidance for coal shipments, particularly in light of the mild summer and low gas prices? Are there opportunities to ramp up export sales in the fourth quarter? A: Cary Marshall, CFO, noted that while the mild summer and low gas prices impacted third-quarter shipments, there are opportunities to participate in the export market in the fourth quarter. Discussions are ongoing with partners, and current pricing levels are favorable for export, particularly for the lower sulfur Gibson product. However, a force majeure declared by a customer may affect the timing of shipments.

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