Alliance Resource Partners (ARLP) recently reported record full year 2022 revenue of $2.4 billion, net income of $577.2 million, and EBITDA of $940.2 million, up 53.3%, 224%, and 96.3%, respectively, year-over-year. The company said its expected 2023 coal sales volumes are approximately 94% committed and priced above 2022 per ton levels.
“ARLP’s record performance [in2022], in a supply and transportation constrained operating environment, is a testament to our team’s ability to execute and deliver reliable energy supply under challenging circumstances,” said Joe Craft, chairman, president, and CEO for ARLP. “In 2022, ARLP achieved its highest reported EBITDA and operating cash flow in the partnership’s 23-year history, driven by continued growth in sales volumes coupled with higher price realizations across our coal operations and royalty segments.”
ARLP sold 35.6 million tons last year, 24.1 million tons originating from the Illinois Basin (ILB) and 11.5 million tons from its Appalachian segment. ILB coal sales grew steadily throughout the year from 5.8 million tons in Q1 2022 to 6.3 million tons in Q4 2022. The company sold about 3 million tons of coal per quarter from its Appalachian segment.
The ILB coal sales figures were remarkable considering a thermal event at ARLP’s Hamilton mine resulted in an unexpected outage that lasted approximately four weeks. There were no injuries to personnel, no damage to the equipment, and mining operations returned to normal production levels in December 2022. The company attributed third-party expenses related to the event at $5.8 million and approximately 500,000 tons of production was lost in Q4 2022.
ARLP’s Q4 2022 coal sales prices per ton increased significantly compared to Q4 2021. ILB sales prices increased 38% to $57.47/ton and Appalachian coal sales increased 67.7% to $89.41/ton.
“ARLP is well positioned to achieve another record year in 2023 by increasing production and sales by 1 to 2 million tons and relying on our highly committed coal contract book and a favorable market outlook to deliver 13% to 17% higher realized pricing compared to 2022,” Craft said. “Even though natural gas prices have fallen recently due to the warm winter experienced so far, coal prices remain elevated in anticipation of international demand firming throughout the year as China’s economy reopens and as European markets look to replace 40 million tons of Russian coal imports received last year but unavailable this year.”
Craft also said that ARLP is beginning to see the significant cost inflation experienced last year start to level off. “Labor pressures and higher sales-related expenses, however, will continue to add to our costs in 2023,” Craft said. “Favorable market forces and our current coal sales commitments will drive top-line growth that should more than offset these inflationary pressures as margins are expected to improve across our business in 2023.”
ARLP expects to produce 36-38 million tons in 2023, 26-27.5 million tons from the ILB and 10-10.5 million tons from Appalachia. It has already sold 34.7 million tons for 2023 and 23.7 million tons in 2024.
