SEGMENT INFORMATION | 16. SEGMENT INFORMATION We operate in the United States as a diversified natural resource company that generates operating and royalty income from the production and marketing of coal to major domestic and international utilities, metallurgical and industrial users as well as royalty income from oil & gas mineral interests. In addition, we continue to position ourselves as a reliable energy partner for the future as we pursue opportunities that support the advancement of energy and related infrastructure. We aggregate multiple operating segments into four reportable segments, Illinois Basin Coal Operations, Appalachia Coal Operations, Oil & Gas Royalties and Coal Royalties. We also have an "all other" category referred to as Other, Corporate and Elimination. Our two coal operations reportable segments correspond to major coal producing regions in the eastern United States with similar economic characteristics including coal quality, geology, coal marketing opportunities, mining and transportation methods and regulatory issues. The two coal operations reportable segments include seven mining complexes operating in Illinois, Indiana, Kentucky, Maryland, Pennsylvania, and West Virginia and a coal loading terminal in Indiana on the Ohio River. Our Oil & Gas Royalties reportable segment includes our oil & gas mineral interests which are located primarily in the Permian (Delaware and Midland), Anadarko (SCOOP/STACK) and Williston (Bakken) basins. The operations within our Oil & Gas Royalties reportable segment primarily include receiving royalties and lease bonuses for our oil & gas mineral interests. Our Coal Royalties reportable segment includes coal mineral reserves and resources owned or leased by Alliance Resource Properties, which are either (a) leased to our mining complexes or (b) near our coal mining operations but not yet leased. The Illinois Basin Coal Operations reportable segment includes (a) the Gibson County Coal mining complex, (b) the Warrior mining complex, (c) the River View mining complex and (d) the Hamilton mining complex. The segment also includes our Mt. Vernon Transfer Terminal, LLC ("Mt. Vernon") coal loading terminal in Indiana which operates on the Ohio River, Mid-America Carbonates, LLC and other support services, and our non-operating mining complexes. The Appalachia Coal Operations reportable segment includes (a) the Mettiki mining complex, (b) the Tunnel Ridge mining complex and (c) the MC Mining mining complex. The Oil & Gas Royalties reportable segment includes oil & gas mineral interests held by AR Midland, LP ("AR Midland") and AllDale I & II and includes Alliance Minerals' equity interests in both AllDale III (Note 9 – Investments) and Cavalier Minerals. The Coal Royalties reportable segment includes coal mineral reserves and resources owned or leased by Alliance Resource Properties that are (a) leased to certain of our mining complexes in both the Illinois Basin Coal Operations and Appalachia Coal Operations reportable segments or (b) located near our operations and external mining operations. Approximately two-thirds of the coal sold by our Coal Operations' mines is leased from our Coal Royalties entities. Other, Corporate and Elimination includes marketing and administrative activities, Matrix Design Group, LLC, its subsidiaries, and Alliance Design Group, LLC (collectively referred to as the "Matrix Group"), our investments in Francis, Infinitum and NGP ETP IV (see Note 9 – Investments), Wildcat Insurance, which assists the ARLP Partnership with its insurance requirements, AROP Funding and Alliance Finance (both discussed in Note 6 – Long-Term Debt) and other miscellaneous activities. The eliminations included in Other, Corporate and Elimination primarily represent the intercompany coal royalty transactions described above between our Coal Royalties reportable segment and our coal operations' mines. Reportable segment results are presented below. Coal Operations Royalties Other, Illinois Corporate and Basin Appalachia Oil & Gas Coal Elimination Consolidated (in thousands) Three Months Ended June 30, 2023 Revenues - Outside $ 355,392 $ 238,242 $ 33,412 $ — $ 14,790 $ 641,836 Revenues - Intercompany — — — 16,567 (16,567) — Total revenues (2) 355,392 238,242 33,412 16,567 (1,777) 641,836 Segment Adjusted EBITDA Expense (3) 214,666 119,319 3,562 5,597 (4,710) 338,434 Segment Adjusted EBITDA (4) 119,551 109,573 29,050 10,970 222 269,366 Capital expenditures (5) 57,469 31,309 40 — 725 89,543 Three Months Ended June 30, 2022 Revenues - Outside (1) $ 313,497 $ 255,682 $ 39,956 $ — $ 10,743 $ 619,878 Revenues - Intercompany — — — 14,525 (14,525) — Total revenues (2) 313,497 255,682 39,956 14,525 (3,782) 619,878 Segment Adjusted EBITDA Expense (1) (3) 194,697 117,369 3,582 5,398 (4,624) 316,422 Segment Adjusted EBITDA (1) (4) 97,352 124,377 37,638 9,127 839 269,333 Capital expenditures 35,343 22,491 — — 4,995 62,829 Six Months Ended June 30, 2023 Revenues - Outside $ 715,798 $ 489,501 $ 68,949 $ — $ 30,510 $ 1,304,758 Revenues - Intercompany — — — 32,080 (32,080) — Total revenues (2) 715,798 489,501 68,949 32,080 (1,570) 1,304,758 Segment Adjusted EBITDA Expense (3) 421,735 245,118 7,986 10,985 (8,094) 677,730 Segment Adjusted EBITDA (4) 251,559 226,123 59,095 21,095 3,441 561,313 Total assets 830,821 470,929 758,816 322,926 404,451 2,787,943 Capital expenditures (5) 119,451 63,814 42 400 1,310 185,017 Six Months Ended June 30, 2022 Revenues - Outside (1) $ 588,193 $ 400,981 $ 73,476 $ — $ 20,650 $ 1,083,300 Revenues - Intercompany — — — 29,692 (29,692) — Total revenues (2) 588,193 400,981 73,476 29,692 (9,042) 1,083,300 Segment Adjusted EBITDA Expense (1) (3) 372,286 201,084 6,859 10,217 (12,568) 577,878 Segment Adjusted EBITDA (1) (4) 175,567 175,480 68,473 19,475 3,525 442,520 Total assets (1) 748,291 457,724 734,760 288,509 171,389 2,400,673 Capital expenditures 71,890 40,836 — — 9,256 121,982 (1) Recast for the JC Resources Acquisition as discussed in Note 1 – Organization and Presentation. (2) Revenues included in the Other, Corporate and Elimination column are attributable to intercompany eliminations, which are primarily intercompany coal royalty eliminations, outside revenues at the Matrix Group and other outside miscellaneous sales and revenue activities. (3) Segment Adjusted EBITDA Expense includes operating expenses, coal purchases, if applicable, and other income. Transportation expenses are excluded as transportation revenues are recognized in an amount equal to transportation expenses when title passes to the customer. The following is a reconciliation of consolidated Segment Adjusted EBITDA Expense to Operating expenses (excluding depreciation, depletion and amortization) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 (in thousands) Operating expenses (excluding depreciation, depletion and amortization) $ 334,402 $ 316,850 $ 673,125 $ 578,873 Outside coal purchases 4,209 151 4,209 151 Other expense (income) (177) (579) 396 (1,146) Segment Adjusted EBITDA Expense $ 338,434 $ 316,422 $ 677,730 $ 577,878 (4) Segment Adjusted EBITDA is defined as net income attributable to ARLP before net interest expense, income taxes, depreciation, depletion and amortization, and general and administrative expenses. Management therefore is able to focus solely on the evaluation of segment operating profitability as it relates to our revenues and operating expenses, which are primarily controlled by our segments. Consolidated Segment Adjusted EBITDA is reconciled to net income as follows: Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 (in thousands) Net income $ 171,305 $ 163,851 $ 363,983 $ 202,224 Noncontrolling interest (1,515) (323) (3,008) (613) Net income attributable to ARLP $ 169,790 $ 163,528 $ 360,975 $ 201,611 General and administrative 20,130 22,480 41,215 41,102 Depreciation, depletion and amortization 68,639 67,690 134,189 131,830 Interest expense, net 6,808 9,304 16,694 18,931 Income tax expense 3,999 6,331 8,240 49,046 Consolidated Segment Adjusted EBITDA $ 269,366 $ 269,333 $ 561,313 $ 442,520 (5) Capital expenditures for the three and six months ended June 30, 2023 exclude $1.1 million and $3.9 million, respectively, paid towards the Acquisition Agreement. Capital expenditures for the six months ended June 30, 2023 also exclude the $72.3 million paid for the JC Resources Acquisition (See Note 2 – Acquisitions) . |