Business Wire | Oct 25, 2021 07:00AM EDT

Alliance Resource Partners, L.P.: Strong Performance in Third Quarter Delivers Sequential Increases to Revenues, up 14.6%, Net Income, up 30.7%, and EBITDA, up 14.6%; Doubles Quarterly Cash Distribution to $0.20 Per Unit; and Updates Guidance

Oct. 25, 2021

TULSA, Okla.--(BUSINESS WIRE)--Oct. 25, 2021--Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported increased financial and operating results for the quarter ended September 30, 2021 (the "2021 Quarter") compared to the quarter ended June 30, 2021 (the "Sequential Quarter"). Primarily on the strength of increased coal sales volumes and price realizations, total revenues for the 2021 Quarter rose 14.6% to $415.4 million. Increased total revenues, partially offset by higher total operating expenses, drove net income for the 2021 Quarter up by 30.7% to $57.5 million, or $0.44 per basic and diluted limited partner unit, while EBITDA climbed 14.6% to $135.9 million. Increased coal sales volumes and prices for the 2021 Quarter led coal sales revenues and Segment Adjusted EBITDA for our coal operating segments higher by 11.1% and 10.9%, respectively. Increased royalty volumes sold and higher sales prices for the 2021 Quarter also drove total royalty revenues and Segment Adjusted EBITDA for our royalties segments up by 18.5% and 27.6%, respectively. (Unless otherwise noted, all references in the text of this release to "net income (loss)" refer to "net income (loss) attributable to ARLP." For definitions of EBITDA and Segment Adjusted EBITDA and related reconciliations to comparable GAAP financial measures, please see the end of this release.)

Financial and operating results for the 2021 Quarter and the nine months ended September 30, 2021 (the "2021 Period") were also significantly improved compared to the quarter ended September 30, 2020 (the "2020 Quarter") and the nine months ended September 30, 2020 (the "2020 Period"), both of which were negatively impacted by reduced global energy demand and weak commodity prices as a result of lockdown measures imposed in response to the COVID-19 pandemic.

Total revenues in the 2021 Quarter increased by 16.8% to $415.4 million compared to $355.7 million in the 2020 Quarter as a result of higher coal sales volumes, which rose 10.3%, and significantly higher oil & gas prices. Revenue growth, partially offset by increased total operating expenses, led net income higher by $30.3 million to $57.5 million for the 2021 Quarter, or $0.44 per basic and diluted limited partner unit, compared to $27.2 million, or $0.21 per basic and diluted limited partner unit, for the 2020 Quarter. EBITDA also increased 14.4% in the 2021 Quarter to $135.9 million compared to $118.8 million in the 2020 Quarter.

Results for the 2021 Period were also sharply higher compared to the 2020 Period as net income increased to $126.3 million, or $0.97 per basic and diluted limited partner unit, compared to a net loss of $164.2 million, or $(1.29) per basic and diluted limited partner unit, for the 2020 Period. The increase in net income resulted from higher revenues and lower depreciation in the 2021 Period and $157.0 million of non-cash impairment charges in the 2020 Period. Excluding the impact of impairment charges, net income of $126.3 million for the 2021 Period compares to an Adjusted net loss of $7.2 million for the 2020 Period, while EBITDA increased 31.5% to $348.9 million in the 2021 Period compared to Adjusted EBITDA of $265.3 million in the 2020 Period. Increased coal sales volumes and oil & gas prices in the 2021 Period drove total revenues higher by 14.0% to $1.10 billion, compared to $961.6 million for the 2020 Period. Ongoing cost control and efficiency initiatives at our mining operations as well as increased production drove Segment Adjusted EBITDA Expense per ton for our coal operations lower by 11.1% to $28.82 per ton for the 2021 Period, compared to $32.43 per ton for the 2020 Period. (For definitions of Adjusted net income (loss), Adjusted EBITDA and Segment Adjusted EBITDA Expense and related reconciliations to comparable GAAP financial measures, please see the end of this release.)

ARLP also announced today that the Board of Directors of its general partner (the "Board") declared a cash distribution to unitholders of $0.20 per unit (an annualized rate of $0.80 per unit) for the 2021 Quarter, payable on November 12, 2021 to all unitholders of record as of the close of trading on November 5, 2021. The announced distribution represents a 100.0% increase over the cash distribution of $0.10 per unit for the Sequential Quarter.

"ARLP's strong performance this year continued during the 2021 Quarter as we again posted sequential increases to total revenues, net income, EBITDA and free cash flow," said Joseph W. Craft III, Chairman, President and Chief Executive Officer. "Reflecting robust demand, coal sales volumes and price realizations increased by 650,000 tons and $1.10 per ton, respectively, over the Sequential Quarter and ARLP continued to add commitments to its coal contract book, entering into new agreements for the delivery of approximately 15.3 million tons over the balance of this year through 2024. The performance of our royalties segments also improved over the Sequential Quarter as higher energy prices and increased royalty volumes propelled Segment Adjusted EBITDA from royalties to a record $28.3 million." (For a definition of free cash flow and related reconciliation to the comparable GAAP financial measure, please see the end of this release.)

Mr. Craft continued, "Year-to-date performance from all of ARLP's business segments has exceeded our initial expectations for 2021. Since the beginning of the year, ARLP has generated $222.3 million of free cash flow, reduced total debt and finance lease obligations by $156.9 million, committed $40.8 million to attractive growth investments, increased liquidity by $110.2 million and improved total leverage to 0.95 times. Based on these results, favorable market fundamentals and expectations for continued strong performance through next year, our Board elected to support management's view that a significant increase to ARLP's cash distribution to unitholders was appropriate."

Operating Results and Analysis



% Change

2021 2020 Quarter 2021 % Change Third Third / Second

(in millions, except per Quarter Quarter Quarter Quarter Sequentialton and per BOE data)



Coal Operations (1)



Illinois Basin

Tons sold 5.750 5.219 10.2 % 5.425 6.0 %

Coal sales price per ton $ 37.85 $ 39.54 (4.3) % $ 38.74 (2.3) %sold

Segment Adjusted EBITDA $ 26.03 $ 25.10 3.7 % $ 25.84 0.7 %Expense per ton

Segment Adjusted EBITDA $ 69.3 $ 75.6 (8.3) % $ 70.6 (1.9) %



Appalachia

Tons sold 2.744 2.483 10.5 % 2.421 13.3 %

Coal sales price per ton $ 52.71 $ 52.12 1.1 % $ 47.84 10.2 %sold

Segment Adjusted EBITDA $ 33.64 $ 34.92 (3.7) % $ 30.75 9.4 %Expense per ton

Segment Adjusted EBITDA $ 52.7 $ 43.1 22.3 % $ 41.6 26.6 %



Total Coal Operations

Tons sold 8.494 7.702 10.3 % 7.846 8.3 %

Coal sales price per ton $ 42.65 $ 43.59 (2.2) % $ 41.55 2.6 %sold

Segment Adjusted EBITDA $ 28.95 $ 28.84 0.4 % $ 27.90 3.8 %Expense per ton

Segment Adjusted EBITDA $ 126.3 $ 117.5 7.5 % $ 113.9 10.9 %



Royalties (1)



Oil & Gas Royalties

BOE sold (2) 0.414 0.468 (11.5) % 0.391 5.9 %

Oil percentage of BOE 51.2 % 49.4 % 3.6 % 45.7 % 12.0 %

Average sales price per $ 48.64 $ 20.71 134.9 % $ 43.73 11.2 %BOE (3)

Segment Adjusted EBITDA $ 2.6 $ 0.8 210.8 % $ 2.4 9.1 %Expense

Segment Adjusted EBITDA $ 19.1 $ 8.9 114.4 % $ 15.4 24.1 %



Coal Royalties (4)

Royalty tons sold 5.344 5.098 4.8 % 4.707 13.5 %

Revenue per royalty ton $ 2.52 $ 2.24 12.5 % $ 2.48 1.6 %sold

Segment Adjusted EBITDA $ 4.3 $ 5.2 (17.5) % $ 4.9 (12.6) %Expense

Segment Adjusted EBITDA $ 9.2 $ 6.3 46.3 % $ 6.8 35.6 %



Total Royalties

Total royalty revenues $ 34.6 $ 21.2 63.7 % $ 29.2 18.5 %

Segment Adjusted EBITDA $ 6.9 $ 6.0 14.8 % $ 7.3 (5.4) %Expense

Segment Adjusted EBITDA $ 28.3 $ 15.2 86.2 % $ 22.2 27.6 %



Consolidated Total (5)

Total revenues $ 415.4 $ 355.7 16.8 % $ 362.4 14.6 %

Segment Adjusted EBITDA $ 239.4 $ 216.8 10.4 % $ 214.5 11.6 %Expense

Segment Adjusted EBITDA $ 154.6 $ 132.7 16.5 % $ 136.1 13.6 %

________________________(1) For definitions of Segment Adjusted EBITDA Expense and Segment AdjustedEBITDA and related reconciliations to comparable GAAP financial measures,please see the end of this release. Segment Adjusted EBITDA Expense per ton isdefined as Segment Adjusted EBITDA Expense - Coal Operations (as reflected inthe reconciliation table at the end of this release) divided by total tonssold. As noted in the reconciliation table at the end of this release, SegmentAdjusted EBITDA and Segment Adjusted EBITDA Expense for our Coal Operationssegments in the 2020 Quarter are adjusted to retroactively reflect the impactof intercompany royalties earned by our Coal Royalties segment (see footnote(4) below).

(2) Barrels of oil equivalent ("BOE") for natural gas volumes is calculated ona 6:1 basis (6,000 cubic feet of natural gas to one barrel).

(3) Average sales price per BOE is defined as oil & gas royalty revenuesexcluding lease bonus revenue divided by total BOE sold.

(4) ARLP's subsidiary, Alliance Resource Properties, LLC ("Alliance ResourceProperties") owns or controls coal reserves that it leases to some of ourmining subsidiaries. Beginning in 2021, we restructured our reportable segmentsto include the coal royalty activities of Alliance Resource Properties as a newCoal Royalties reportable segment. This activity was previously included in ourIllinois Basin and Appalachian reportable segments as well as our other andcorporate activities.

(5) Reflects total consolidated results, which include our other and corporateactivities and eliminations in addition to the Illinois Basin, Appalachia, Oil& Gas Royalties and Coal Royalties reportable segments highlighted above.

ARLP's coal sales volumes increased in all regions compared to both the 2020 and Sequential Quarters. Improved coal demand primarily in the export markets during the 2021 Quarter drove coal sales volumes higher by 10.2% and 10.5% in the Illinois Basin and Appalachian regions, respectively, compared to the 2020 Quarter. Compared to the Sequential Quarter, Illinois Basin coal sales volumes increased 6.0% in the 2021 Quarter primarily as a result of increased volumes from our Hamilton and Gibson South mines. In Appalachia, coal sales volumes increased 13.3% compared to the Sequential Quarter primarily due to increased quarterly sales volumes from our Tunnel Ridge longwall operation in the 2021 Quarter. Coal sales price per ton sold in the 2021 Quarter decreased in the Illinois Basin by 4.3% compared to the 2020 Quarter reflecting the expiration of higher-priced sales contracts. In Appalachia, coal sales prices increased by 10.2% compared to the Sequential Quarter due to improved price realizations at our Mettiki and MC Mining operations. Total coal inventory fell to 0.9 million tons at the end of the 2021 Quarter, a decrease of 0.3 million tons and 0.5 million tons compared to the end of the 2020 and Sequential Quarters, respectively, as a result of higher coal sales volumes as discussed above, partially offset by increased production volumes.

Segment Adjusted EBITDA Expense per ton in the Illinois Basin increased by 3.7% compared to the 2020 Quarter due to increased roof support and maintenance expenses as well as higher labor costs per ton across the region. In Appalachia, Segment Adjusted EBITDA Expense per ton decreased 3.7% compared to the 2020 Quarter as a result of increased volumes and reduced longwall subsidence expense in the 2021 Quarter and a longwall move in the 2020 Quarter at our Tunnel Ridge mine, the production benefits from MC Mining's transition of mining operations to a new reserve area in the second half of 2020 and the benefits of ongoing expense control and efficiency initiatives. Compared to the Sequential Quarter, Segment Adjusted EBITDA Expense per ton in Appalachia increased 9.4% in the 2021 Quarter due to increased selling and maintenance expenses, reduced recoveries at our Mettiki and Tunnel Ridge mines and sales of high-priced purchased coal tons.

For our Oil & Gas Royalties segment, significantly higher sales price realizations per BOE in the 2021 Quarter compared to the 2020 Quarter more than offset lower volumes and higher Segment Adjusted EBITDA Expense resulting in Segment Adjusted EBITDA increasing by $10.2 million. Compared to the Sequential Quarter, Segment Adjusted EBITDA increased by $3.7 million in the 2021 Quarter driven primarily by increased oil & gas prices and a 23.2% growth in our oil volumes produced in the Permian basin.

Segment Adjusted EBITDA for our Coal Royalties segment increased to $9.2 million for the 2021 Quarter compared to $6.3 million and $6.8 million for the 2020 and Sequential Quarters, respectively, as a result of increased royalty tons sold and, higher average royalty rates per ton.

Outlook

"The financial futures for oil, natural gas and coal indicate market conditions should remain robust across the entire global energy complex into 2023," said Mr. Craft. "Coal demand in our primary U.S. markets is extremely strong. Reflecting continued post-COVID economic recovery, increased power usage and high natural gas prices, domestic utilities have leaned on coal-fired generation to meet rising demand for electricity. Eastern U.S. coal generation has increased 23% year-to-date over 2020 levels, capacity utilization of the domestic coal fleet recently reached a three-year high and utility stockpiles have declined to critical levels heading into the winter heating season. International coal demand and fundamentals are also extremely strong, pushing recent API 2 prices to record highs and the forward curve signals favorable pricing for the next several years. In the face of increased coal demand, lack of global supply response, and transportation challenges, fuel buyers are scrambling to secure necessary coal supply. We believe the recent rise in coal prices will continue over the intermediate term and ARLP expects to benefit from these markets opportunities."

Mr. Craft continued, "The future also looks bright for our royalty businesses. Oil, gas and natural gas liquids prices have increased significantly since the beginning of the year and the forward price curve remains favorable. While still below pre-pandemic levels, oil & gas production from our existing acreage continues to increase as drilling and completion activity modestly improves. We also recently completed the purchase of approximately 1,500 net royalty acres in the Permian basin, increasing ARLP's already attractive position in the Delaware portion of this basin to approximately 10,000 net royalty acres. This newly acquired acreage currently has four producing wells and is under active development by a well-capitalized operator who has two rigs on location drilling eight new wells with the potential for up to 90 wells to be ultimately completed on our acreage. With continued expansion in our oil & gas royalties and confidence in steady growth from our coal royalties, we anticipate that the contribution of our royalty segments to ARLP's consolidated results will continue to increase in the future."

ARLP is updating its full-year 2021 guidance for the following selected items:





2021 Full Year Guidance



Coal Operations

Volumes (Million Short Tons)

Illinois Basin Sales Tons 22.0 - 22.3

Appalachia Sales Tons 10.1 - 10.3

Total Sales Tons 32.1 - 32.6



Committed & Priced Sales Tons

2021 - Domestic/Export/Total 28.4/4.0/32.4

2022 - Domestic/Export/Total 27.0/2.4/29.4



Per Ton Estimates

Coal Sales Price per ton sold (1) $42.10 - $44.10

Segment Adjusted EBITDA Expense per ton sold (2) $28.00 - $30.00



Royalties

Oil & Gas Royalties

Oil (000 Barrels) 775 - 825

Natural gas (000 MCF) 2,875 - 3,075

Liquids (000 Barrels) 310 - 340

Segment Adjusted EBITDA Expense (% of Oil & Gas Royalties ~ 12.5%Revenue)



Coal Royalties

Royalty tons sold (Million Short Tons) 19.5 - 20.0

Revenue per royalty ton sold $2.50 - $2.60

Segment Adjusted EBITDA Expense per royalty ton sold $0.85 - $0.95



Consolidated (Millions)

Depreciation, depletion and amortization $250 - $260

General and administrative $68 - $70

Net interest expense $38 - $39

Capital expenditures $125 - $130

____________________ (1) Sales price per ton is defined as total coal sales divided by total tonssold.

(2) For a definition of Segment Adjusted EBITDA Expense and relatedreconciliation to the comparable GAAP financial measure please see the end ofthis release.

A conference call regarding ARLP's 2021 Quarter financial results is scheduled for today at 10:00 a.m. Eastern. To participate in the conference call, dial (877) 407-0784 and request to be connected to the Alliance Resource Partners, L.P. earnings conference call. International callers should dial (201) 689-8560 and request to be connected to the same call. Investors may also listen to the call via the "investor information" section of ARLP's website at http://www.arlp.com.

An audio replay of the conference call will be available for approximately one week. To access the audio replay, dial U.S. Toll Free (844) 512-2921; International Toll (412) 317-6671 and request to be connected to replay using access code 13723742.

This announcement is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to gross income, gain or loss that is effectively connected with a United States trade or business. Accordingly, ARLP's distributions to foreign investors are subject to federal income tax withholding at the highest applicable tax rate.

About Alliance Resource Partners, L.P.

ARLP is a diversified natural resource company that generates operating and royalty income from coal produced by its mining complexes and royalty income from mineral interests it owns in strategic oil & gas producing regions in the United States, primarily the Permian, Anadarko and Williston basins.

ARLP currently produces coal from seven mining complexes its subsidiaries operate in Illinois, Indiana, Kentucky, Maryland and West Virginia. ARLP also operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana. ARLP markets its coal production to major domestic and international utilities and industrial users and is currently the second largest coal producer in the eastern United States.

In addition, ARLP also generates income from a variety of other sources.

News, unit prices and additional information about ARLP, including filings with the Securities and Exchange Commission ("SEC"), are available at http://www.arlp.com. For more information, contact the investor relations department of ARLP at (918) 295-7674 or via e-mail at investorrelations@arlp.com.

***

The statements and projections used throughout this release are based on current expectations. These statements and projections are forward-looking, and actual results may differ materially. These projections do not include the potential impact of any mergers, acquisitions or other business combinations that may occur after the date of this release. We have included more information below regarding business risks that could affect our results.

FORWARD-LOOKING STATEMENTS: With the exception of historical matters, any matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projected results. Those forward-looking statements include expectations with respect to coal and oil & gas consumption and expected future prices, optimizing cash flows, reducing operating and capital expenditures, preserving liquidity and maintaining financial flexibility, among others. These risks to our ability to achieve these outcomes include, but are not limited to, the following: the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of businesses' and governments' responses to the pandemic on our operations and personnel, and on demand for coal, oil and natural gas, the financial condition of our customers and suppliers, available liquidity and capital sources and broader economic disruptions; changes in macroeconomic and market conditions and market volatility arising from the COVID-19 pandemic, including coal, oil, natural gas and natural gas liquids prices, and the impact of such changes and volatility on our financial position; decline in the coal industry's share of electricity generation, including as a result of environmental concerns related to coal mining and combustion and the cost and perceived benefits of other sources of electricity and fuels, such as oil & gas, nuclear energy, and renewable fuels; changing global economic conditions or in industries in which our customers operate; changes in coal prices and/or oil & gas prices, demand and availability which could affect our operating results and cash flows; actions of the major oil producing countries with respect to oil production volumes and prices could have direct and indirect impacts over the near and long term on oil & gas exploration and production operations at the properties in which we hold mineral interests; the effectiveness or lack of effectiveness in distributed vaccines to reduce the impact of COVID-19; changes in competition in domestic and international coal markets and our ability to respond to such changes; potential shut-ins of production by operators of the properties in which we hold mineral interests due to low oil, natural gas and natural gas liquid prices or the lack of downstream demand or storage capacity; risks associated with the expansion of our operations and properties; our ability to identify and complete acquisitions; dependence on significant customer contracts, including renewing existing contracts upon expiration; adjustments made in price, volume, or terms to existing coal supply agreements; recent action and the possibility of future action on trade made by the United States and foreign governments; the effect of changes in taxes or tariffs and other trade measures; legislation, regulations, and court decisions and interpretations thereof, both domestic and foreign, including those relating to the environment and the release of greenhouse gases, mining, miner health and safety, hydraulic fracturing, and health care; deregulation of the electric utility industry or the effects of any adverse change in the coal industry, electric utility industry, or general economic conditions; investors' and other stakeholders' increasing attention to environmental, social and governance matters; liquidity constraints, including those resulting from any future unavailability of financing; customer bankruptcies, cancellations or breaches to existing contracts, or other failures to perform; customer delays, failure to take coal under contracts or defaults in making payments; our productivity levels and margins earned on our coal sales; disruptions to oil & gas exploration and production operations at the properties in which we hold mineral interests; changes in raw material costs; changes in the availability of skilled labor; our ability to maintain satisfactory relations with our employees; increases in labor costs including costs of health insurance and taxes resulting from the Affordable Care Act, adverse changes in work rules, or cash payments or projections associated with workers' compensation claims; increases in transportation costs and risk of transportation delays or interruptions; operational interruptions due to geologic, permitting, labor, weather-related or other factors; risks associated with major mine-related accidents, mine fires, mine floods or other interruptions; results of litigation, including claims not yet asserted; foreign currency fluctuations that could adversely affect the competitiveness of our coal abroad; difficulty maintaining our surety bonds for mine reclamation as well as workers' compensation and black lung benefits; difficulty in making accurate assumptions and projections regarding post-mine reclamation as well as pension, black lung benefits, and other post-retirement benefit liabilities; uncertainties in estimating and replacing our coal reserves; uncertainties in estimating and replacing our oil & gas reserves; uncertainties in the amount of oil & gas production due to the level of drilling and completion activity by the operators of our oil & gas properties; the impact of current and potential changes to federal or state tax rules and regulations, including a loss or reduction of benefits from certain tax deductions and credits; difficulty obtaining commercial property insurance, and risks associated with our participation in the commercial insurance property program; evolving cybersecurity risks, such as those involving unauthorized access, denial-of-service attacks, malicious software, data privacy breaches by employees, insiders or others with authorized access, cyber or phishing-attacks, ransomware, malware, social engineering, physical breaches or other actions; and difficulty in making accurate assumptions and projections regarding future revenues and costs associated with equity investments in companies we do not control.

Additional information concerning these and other factors can be found in ARLP's public periodic filings with the SEC, including ARLP's Annual Report on Form 10-K for the year ended December 31, 2020, filed on February 23, 2021 and ARLP's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021, filed on May 7, 2021 and August 6, 2021, respectively, with the SEC. Except as required by applicable securities laws, ARLP does not intend to update its forward-looking statements.

ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA

(In thousands, except unit and per unit data)

(Unaudited)



Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020



Tons Sold 8,494 7,702 23,168 20,139

Tons Produced 7,986 7,202 23,468 19,546

Mineral Interest 414 468 1,205 1,374 Volumes (BOE)



SALES ANDOPERATING REVENUES:

Coal sales $ 362,264 $ 335,767 $ 975,725 $ 886,690

Oil & gas 20,109 9,693 51,222 31,718 royalties

Transportation 22,027 6,226 45,153 16,722 revenues

Other revenues 11,039 3,965 24,404 26,486

Total revenues 415,439 355,651 1,096,504 961,616



EXPENSES:

Operatingexpenses(excluding 233,201 216,027 642,760 637,533 depreciation,depletion andamortization)

Transportation 22,027 6,226 45,153 16,722 expenses

Outside coal 6,065 - 6,179 - purchases

General and 18,655 13,871 51,651 41,131 administrative

Depreciation,depletion and 68,763 80,182 192,698 237,662 amortization

Asset - - - 24,977 impairments

Goodwill - - - 132,026 impairment

Total operating 348,711 316,306 938,441 1,090,051 expenses



INCOME (LOSS) 66,728 39,345 158,063 (128,435) FROM OPERATIONS



Interest (9,408) (11,186) (29,646) (34,911) expense, net

Interest income 19 30 51 112

Equity methodinvestment 703 62 1,106 650 income

Other expense (84) (723) (2,632) (1,456)

INCOME (LOSS)BEFORE INCOME 57,958 27,528 126,942 (164,040) TAXES



INCOME TAX 234 293 227 111 EXPENSE



NET INCOME 57,724 27,235 126,715 (164,151) (LOSS)



LESS: NET INCOMEATTRIBUTABLE TO (176) (36) (384) (97) NONCONTROLLINGINTEREST



NET INCOME(LOSS) $ 57,548 $ 27,199 $ 126,331 $ (164,248) ATTRIBUTABLE TOARLP



EARNINGS PERLIMITED PARTNERUNIT - BASIC AND $ 0.44 $ 0.21 $ 0.97 $ (1.29)

DILUTED



WEIGHTED-AVERAGENUMBER OF UNITSOUTSTANDING - 127,195,219 127,195,219 127,195,219 127,154,398

BASIC ANDDILUTED

ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except unit data)

(Unaudited)

September 30,

December 31,

2021

2020

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

104,611

$

55,574

Trade receivables

142,007

104,579

Other receivables

1,064

3,481

Inventories, net

65,484

56,407

Advance royalties

2,063

4,168

Prepaid expenses and other assets

10,931

21,565

Total current assets

326,160

245,774

PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment, at cost

3,570,201

3,554,090

Less accumulated depreciation, depletion and amortization

(1,873,987)

(1,753,845)

Total property, plant and equipment, net

1,696,214

1,800,245

OTHER ASSETS:

Advance royalties

65,034

56,791

Equity method investments

26,180

27,268

Goodwill

4,373

4,373

Operating lease right-of-use assets

14,338

15,004

Other long-term assets

16,676

16,561

Total other assets

126,601

119,997

TOTAL ASSETS

$

2,148,975

$

2,166,016

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:

Accounts payable

$

70,425

$

47,511

Accrued taxes other than income taxes

23,797

25,054

Accrued payroll and related expenses

39,949

28,524

Accrued interest

12,500

5,132

Workers' compensation and pneumoconiosis benefits

10,635

10,646

Current finance lease obligations

821

766

Current operating lease obligations

1,809

1,854

Other current liabilities

14,379

21,919

Current maturities, long-term debt, net

16,770

73,199

Total current liabilities

191,085

214,605

LONG-TERM LIABILITIES:

Long-term debt, excluding current maturities, net

425,075

519,421

Pneumoconiosis benefits

107,099

105,068

Accrued pension benefit

41,220

46,965

Workers' compensation

43,818

47,521

Asset retirement obligations

122,935

121,487

Long-term finance lease obligations

835

1,458

Long-term operating lease obligations

12,722

13,078

Other liabilities

22,348

24,146

Total long-term liabilities

776,052

879,144

Total liabilities

967,137

1,093,749

PARTNERS' CAPITAL:

ARLP Partners' Capital:

Limited Partners - Common Unitholders 127,195,219 units outstanding

1,251,674

1,148,565

Accumulated other comprehensive loss

(80,981)

(87,674)

Total ARLP Partners' Capital

1,170,693

1,060,891

Noncontrolling interest

11,145

11,376

Total Partners' Capital

1,181,838

1,072,267

TOTAL LIABILITIES AND PARTNERS' CAPITAL

$

2,148,975

$

2,166,016

ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except unit data)

(Unaudited)



September 30, December 31,

2021 2020

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 104,611 $ 55,574

Trade receivables 142,007 104,579

Other receivables 1,064 3,481

Inventories, net 65,484 56,407

Advance royalties 2,063 4,168

Prepaid expenses and other assets 10,931 21,565

Total current assets 326,160 245,774

PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment, at cost 3,570,201 3,554,090

Less accumulated depreciation, depletion and (1,873,987) (1,753,845) amortization

Total property, plant and equipment, net 1,696,214 1,800,245

OTHER ASSETS:

Advance royalties 65,034 56,791

Equity method investments 26,180 27,268

Goodwill 4,373 4,373

Operating lease right-of-use assets 14,338 15,004

Other long-term assets 16,676 16,561

Total other assets 126,601 119,997

TOTAL ASSETS $ 2,148,975 $ 2,166,016



LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:

Accounts payable $ 70,425 $ 47,511

Accrued taxes other than income taxes 23,797 25,054

Accrued payroll and related expenses 39,949 28,524

Accrued interest 12,500 5,132

Workers' compensation and pneumoconiosis 10,635 10,646 benefits

Current finance lease obligations 821 766

Current operating lease obligations 1,809 1,854

Other current liabilities 14,379 21,919

Current maturities, long-term debt, net 16,770 73,199

Total current liabilities 191,085 214,605

LONG-TERM LIABILITIES:

Long-term debt, excluding current maturities, 425,075 519,421 net

Pneumoconiosis benefits 107,099 105,068

Accrued pension benefit 41,220 46,965

Workers' compensation 43,818 47,521

Asset retirement obligations 122,935 121,487

Long-term finance lease obligations 835 1,458

Long-term operating lease obligations 12,722 13,078

Other liabilities 22,348 24,146

Total long-term liabilities 776,052 879,144

Total liabilities 967,137 1,093,749



PARTNERS' CAPITAL:

ARLP Partners' Capital:

Limited Partners - Common Unitholders 1,251,674 1,148,565 127,195,219 units outstanding

Accumulated other comprehensive loss (80,981) (87,674)

Total ARLP Partners' Capital 1,170,693 1,060,891

Noncontrolling interest 11,145 11,376

Total Partners' Capital 1,181,838 1,072,267

TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 2,148,975 $ 2,166,016

ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Nine Months Ended

September 30,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES

$

310,977

$

291,788

CASH FLOWS FROM INVESTING ACTIVITIES:

Property, plant and equipment:

Capital expenditures

(88,661)

(102,820)

Change in accounts payable and accrued liabilities

2,281

(9,698)

Proceeds from sale of property, plant and equipment

6,432

2,750

Distributions received from investments in excess of cumulative earnings

1,088

841

Escrow deposit for oil & gas reserve acquisition

(1,550)

-

Net cash used in investing activities

(80,410)

(108,927)

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings under securitization facility

35,000

46,100

Payments under securitization facility

(90,900)

(47,700)

Proceeds from equipment financings

-

14,705

Payments on equipment financings

(12,888)

(10,622)

Borrowings under revolving credit facilities

15,000

70,000

Payments under revolving credit facilities

(102,500)

(190,000)

Borrowings from line of credit

3,230

-

Payments on finance lease obligations

(568)

(8,204)

Payment of debt issuance costs

(113)

(5,821)

Payments for purchase of units and tax withholdings related to settlements under deferred compensation plans

(1,090)

(1,310)

Distributions paid to Partners

(26,086)

(51,753)

Other

(615)

(603)

Net cash used in financing activities

(181,530)

(185,208)

NET CHANGE IN CASH AND CASH EQUIVALENTS

49,037

(2,347)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

55,574

36,482

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

104,611

$

34,135

Reconciliation of GAAP "net income (loss) attributable to ARLP" to non-GAAP "Adjusted net income (loss) attributable to ARLP" (in thousands).

Adjusted net income attributable to ARLP is defined as net income (loss) attributable to ARLP modified for certain items that may not reflect the trend of future results, such as asset and goodwill impairments.

Adjusted net income attributable to ARLP should not be considered as an alternative to net income (loss) attributable to ARLP or any other measure of financial performance presented in accordance with GAAP. Adjusted net income attributable to ARLP excludes certain items that management believes affect the comparability of our operating results. This adjusted financial measure is used by our management and external users of our financial statements, such as investors, commercial banks, research analysts and others, to assess:

* our operational trends and performance relative to other coal and mineral companies; * the comparability of our performance to earnings estimates provided by security analysts; and * our performance excluding items which are generally nonrecurring in nature or whose timing or amount cannot be reasonably estimated.

We believe Adjusted net income attributable to ARLP is a useful measure for investors because it further demonstrates our financial performance without regard to items that may not reflect the trend of future results.

ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



Nine Months Ended

September 30,

2021 2020



CASH FLOWS FROM OPERATING ACTIVITIES $ 310,977 $ 291,788



CASH FLOWS FROM INVESTING ACTIVITIES:

Property, plant and equipment:

Capital expenditures (88,661) (102,820)

Change in accounts payable and accrued 2,281 (9,698) liabilities

Proceeds from sale of property, plant and 6,432 2,750 equipment

Distributions received from investments in excess 1,088 841 of cumulative earnings

Escrow deposit for oil & gas reserve acquisition (1,550) -

Net cash used in investing activities (80,410) (108,927)



CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings under securitization facility 35,000 46,100

Payments under securitization facility (90,900) (47,700)

Proceeds from equipment financings - 14,705

Payments on equipment financings (12,888) (10,622)

Borrowings under revolving credit facilities 15,000 70,000

Payments under revolving credit facilities (102,500) (190,000)

Borrowings from line of credit 3,230 -

Payments on finance lease obligations (568) (8,204)

Payment of debt issuance costs (113) (5,821)

Payments for purchase of units and taxwithholdings related to settlements under (1,090) (1,310) deferred compensation plans

Distributions paid to Partners (26,086) (51,753)

Other (615) (603)

Net cash used in financing activities (181,530) (185,208)



NET CHANGE IN CASH AND CASH EQUIVALENTS 49,037 (2,347)



CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 55,574 36,482



CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 104,611 $ 34,135

Reconciliation of GAAP "net income (loss) attributable to ARLP" to non-GAAP "Adjusted net income (loss) attributable to ARLP" (in thousands).

Adjusted net income attributable to ARLP is defined as net income (loss) attributable to ARLP modified for certain items that may not reflect the trend of future results, such as asset and goodwill impairments.

Adjusted net income attributable to ARLP should not be considered as an alternative to net income (loss) attributable to ARLP or any other measure of financial performance presented in accordance with GAAP. Adjusted net income attributable to ARLP excludes certain items that management believes affect the comparability of our operating results. This adjusted financial measure is used by our management and external users of our financial statements, such as investors, commercial banks, research analysts and others, to assess:

* our operational trends and performance relative to other coal and mineral companies; * the comparability of our performance to earnings estimates provided by security analysts; and * our performance excluding items which are generally nonrecurring in nature or whose timing or amount cannot be reasonably estimated.

We believe Adjusted net income attributable to ARLP is a useful measure for investors because it further demonstrates our financial performance without regard to items that may not reflect the trend of future results.



Three Three Months Ended Nine Months Ended Months Ended

September 30, September 30, June 30,

2021 2020 2021 2020 2021



Net income (loss)attributable to $ 57,548 $ 27,199 $ 126,331 $ (164,248) $ 44,035ARLP

Asset impairments - - - 24,977 -

Goodwill impairment - - - 132,026 -

Adjusted net income(loss) attributable $ 57,548 $ 27,199 $ 126,331 $ (7,245) $ 44,035to ARLP

Reconciliation of GAAP "net income (loss) attributable to ARLP" to non-GAAP "EBITDA," "Adjusted EBITDA" and "Distributable Cash Flow" (in thousands).

EBITDA is defined as net income (loss) attributable to ARLP before net interest expense, income taxes and depreciation, depletion and amortization and Adjusted EBITDA is EBITDA modified for certain items that may not reflect the trend of future results, such as asset and goodwill impairments. Distributable cash flow ("DCF") is defined as Adjusted EBITDA excluding interest expense (before capitalized interest), interest income, income taxes and estimated maintenance capital expenditures. Distribution coverage ratio ("DCR") is defined as DCF divided by distributions paid to partners.

Management believes that the presentation of such additional financial measures provides useful information to investors regarding our performance and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) provide additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions and (iii) present measurements that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations.

EBITDA, Adjusted EBITDA, DCF and DCR should not be considered as alternatives to net income (loss) attributable to ARLP, net income (loss), income (loss) from operations, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. EBITDA, Adjusted EBITDA and DCF are not intended to represent cash flow and do not represent the measure of cash available for distribution. Our method of computing EBITDA, Adjusted EBITDA, DCF and DCR may not be the same method used to compute similar measures reported by other companies, or EBITDA, Adjusted EBITDA, DCF and DCR may be computed differently by us in different contexts (i.e. public reporting versus computation under financing agreements).



Three Three Months Ended Nine Months Ended Months

Ended

September 30, September 30, June 30,

2021 2020 2021 2020 2021



Net income(loss) $ 57,548 $ 27,199 $ 126,331 $ (164,248) $ 44,035 attributableto ARLP

Depreciation,depletion and 68,763 80,182 192,698 237,662 64,733 amortization

Interest 9,512 11,355 29,909 36,064 9,932 expense, net

Capitalized (123) (199) (314) (1,265) (105) interest

Income tax 234 293 227 111 5 expense

EBITDA 135,934 118,830 348,851 108,324 118,600

Asset - - - 24,977 - impairments

Goodwill - - - 132,026 - impairment

Adjusted 135,934 118,830 348,851 265,327 118,600 EBITDA

Interest (9,512) (11,355) (29,909) (36,064) (9,932) expense, net

Income tax (234) (293) (227) (111) (5) expense

Estimatedmaintenancecapital (39,131) (35,002) (114,993) (94,994) (36,657) expenditures(1)

Distributable $ 87,057 $ 72,180 $ 203,722 $ 134,158 $ 72,006 Cash Flow

Distributionspaid to $ 13,041 $ - $ 26,086 $ 51,753 $ 13,045 partners

DistributionCoverage 6.68 - 7.81 2.59 5.52 Ratio

(1) Maintenance capital expenditures are those capital expenditures required tomaintain, over the long-term, the existing infrastructure of our coal assets.We estimate maintenance capital expenditures on an annual basis based upon afive-year planning horizon. For the 2021 planning horizon, average annualestimated maintenance capital expenditures are assumed to be $4.90 per tonproduced compared to the estimated $4.86 per ton produced in 2020. Our actualmaintenance capital expenditures fluctuate depending on various factors,including maintenance schedules and timing of capital projects, among others.We annually disclose actual maintenance capital expenditures in our Form 10-Kfiled with the SEC.

Reconciliation of GAAP "Cash flows from operating activities" to non-GAAP "Free cash flow" (in thousands).

Free cash flow is defined as cash flows from operating activities less capital expenditures. Free cash flow should not be considered as an alternative to cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. Our method of computing free cash flow may not be the same method used by other companies. Free cash flow is a supplemental liquidity measure used by our management to assess our ability to generate excess cash flow from our operations.



Three Three Months Ended Nine Months Ended Months

Ended

September 30, September 30, June 30,

2021 2020 2021 2020 2021



Cash flows fromoperating $ 152,761 $ 121,620 $ 310,977 $ 291,788 $ 103,569 activities

Capital (33,035 ) (18,575 ) (88,661 ) (102,820 ) (24,189 )expenditures

Free cash flow $ 119,726 $ 103,045 $ 222,316 $ 188,968 $ 79,380

Reconciliation of GAAP "Operating Expenses" to non-GAAP "Segment Adjusted EBITDA Expense" and Reconciliation of non-GAAP "Adjusted EBITDA" to "Segment Adjusted EBITDA" (in thousands).

Segment Adjusted EBITDA Expense includes operating expenses, coal purchases and other expense. Transportation expenses are excluded as these expenses are passed through to our customers and, consequently, we do not realize any margin on transportation revenues. Segment Adjusted EBITDA Expense is used as a supplemental financial measure by our management to assess the operating performance of our segments. Segment Adjusted EBITDA Expense is a key component of EBITDA and Adjusted EBITDA in addition to coal sales, royalty revenues and other revenues. The exclusion of corporate general and administrative expenses from Segment Adjusted EBITDA Expense allows management to focus solely on the evaluation of segment operating performance as it primarily relates to our operating expenses. Segment Adjusted EBITDA Expense - Coal Operations excludes expenses of our Oil & Gas Royalties segment and is adjusted for intercompany interactions with our Coal Royalties segment.



Three Three Months Ended Nine Months Ended Months

Ended

September 30, September 30, June 30,

2021 2020 2021 2020 2021



Operating expense $ 233,201 $ 216,027 $ 642,760 $ 637,533 $ 213,039

Outside coal purchases 6,065 - 6,179 - 114

Other expense 84 723 2,632 1,456 1,351

Segment Adjusted EBITDA 239,350 216,750 651,571 638,989 214,504 Expense

Segment Adjusted EBITDAExpense - Oil & Gas (2,639) (849) (7,116) (2,851) (2,419) Royalties

Segment Adjusted EBITDA (4,258) (5,161) (13,157) (12,649) (4,871) Expense - Coal Royalties

Intercompany coal royalties 13,456 11,406 36,410 29,555 11,653 (1)

Segment Adjusted EBITDA $ 245,909 $ 222,146 $ 667,708 $ 653,044 $ 218,867 Expense - Coal Operations

___________________________(1) Intercompany coal royalties earned by our Coal Royalties segment representcoal royalty expense incurred by our operating mines and are therefore addedback to consolidated Segment Adjusted EBITDA Expense to reflect SegmentAdjusted EBITDA Expense - Coal Operations.

Segment Adjusted EBITDA is defined as net income (loss) attributable to ARLP before net interest expense, income taxes, depreciation, depletion and amortization, general and administrative expenses and asset and goodwill impairments. Segment Adjusted EBITDA - Coal Operations excludes the contribution of our Oil & Gas and Coal Royalties segments to allow management to focus solely on the operating performance of our Illinois Basin and Appalachia segments.



Three Three Months Ended Nine Months Ended Months

Ended

September 30, September 30, June 30,

2021 2020 2021 2020 2021



AdjustedEBITDA (See $ 135,934 $ 118,830 $ 348,851 $ 265,327 $ 118,600reconciliationto GAAP above)

General and 18,655 13,871 51,651 41,131 17,492administrative

SegmentAdjusted 154,589 132,701 400,502 306,458 136,092EBITDA

SegmentAdjusted (28,278) (15,185) (69,658) (46,487) (22,161)EBITDA - TotalRoyalties

SegmentAdjusted $ 126,311 $ 117,516 $ 330,844 $ 259,971 $ 113,931EBITDA - CoalOperations

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CONTACT: Brian L. Cantrell Alliance Resource Partners, L.P. (918) 295-7673