ARLP - Earnings call transcript Q4 2020 | Alliance Resource Partners, L.P.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the Alliance Resource Partners Fourth Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would like now to turn the conference over to Brian Cantrell, Senior Vice President and Chief Financial Officer. ahead. go Please

Brian Cantrell

as and Partners Tom, operating Earlier morning, as this And and market Thank outlook. its welcome, fourth Resource well results these released now and perspective quarter Alliance on we'll conditions you, discuss everyone. our XXXX results. financial

remarks, the our your call questions. prepared Following to we'll open

from are with some assumptions variety a of Securities uncertainties and reminder Before remarks Commission, also may to beginning, that and a time include morning's reflected subject today in time our and Exchange in filings contained our the press of forward-looking to statements that are release. risks, this

or While by to results more information currently future of may those remarks, we providing vary these update of assumptions or revise available partnership or any or obligation based risks a underlying one no or materialize statement events materially these uncertainties otherwise, from if new forward-looking statements these or has if projected law are result actual to to incorrect, whether do on required as our so. us, prove publicly forward-looking information, expected. In the unless

Finally, differences non-GAAP measures financial the these SEC been posted of Definitions and to financial Form and website we'll GAAP furnished measures between comparable most ARLP's the the on directly non-GAAP release, are reconciliations of contained be which has also financial discussing and certain at press the end measures. on our X-K.

posted financial to XXXX rebound each $XXX.X begin of increased to increased and to continued sequential metrics Executive contributed preliminaries million. all from with oil quarter, and Chief and consolidated Higher our revenues from on balance With by X.X% quarter XXXX in major compared total review his and reported working capital as to our President The Craft, ARLP the for $XX and over morning, higher and continue net I'll EBITDA, for and operations sequential This ARLP's perspective a the the strengthen coal our sales Alliance the reflecting Chairman, the compared financial million operating XX.X% entire respectively, flows and a which increases we required performance Officer, gas call capital, then Joe segment, cash expenditures, to out position. climbed income X.X% way, of remained results, our expenses focused the to outlook. turn rose controlling $XXX.X sheet to revenues quarter. million, to these to organization royalty efforts and revenues minerals and optimizing and

reduced obligations XXXX generated the million, by During finance and flow increased by liquidity $XX.X ARLP $XX.X lease quarter, million of debt and million. free cash $XX.X

leverage improved total in by and quarter Our of comfortably compliance sequential the all year we our X.XXx, debt with X.X% ended the covenants. to from

consolidated results, of at let's a the take business our from performance closer Turning segments. ARLP's look

coal were price coal sequential production X.X to and million sales X.X% offset segment, than sales coal compared million with lower to $XX.X pushed minerals more million tons rising quarter, at Compared customer ARLP's XXXX tons. X.X% coal sales XXX,XXX by approximately volumes EBITDA drove to quarter, volumes tons EBITDA X.X coal inventory million. requirements X.X adjusted commodity to and inventories Increased coal of increasing volumes the quarter, realizations our For $XXX.X our focus the total segment cost to total higher operations and to lower declined XX.X% both million. X.X% driving during BOE to to the drove quarter, by XX.X% pricing Ongoing end XXXX stronger $XX.XX X.X% reduced led higher ton. to higher segment initiatives the ton and the million. per per ARLP's revenues to all ARLP the performance our expense meet realizations quarter. per sales control end matching EBITDA the and tons in by revenues sequential compared X.X% to total the sequentially also The for reducing segment average of quarter expense of higher adjusted segment adjusted production quarter. compared production $XXX.X improved Increased cost sequential at minerals at segment XXXX as lower sequential on the to up

BOE initiatives fell $XXX stronger and sequential third respectively, as encouraged surprise billion, for pandemic effects our the income net the revenues. net XXXX and teams the from and in compared prices the that the adjusted coal income leading quarters results a in of the mineral to gradual of the to the COVID-XX resulted dramatically our XXXX resulting reduced the Total and compared volumes of adjusted Reflecting XX.X% $XXX.X to million, the to XXXX gas from respectively, should to While respond a operator actually XXXX year. global as by acreage, million, second more revenues quarter, of to compared year. commodity In pandemic, negatively than XX.X% of total $XXX.X in resumption and $XX.X and million the the XXXX for demand interest volumes prices have offset decrease the and for impacted lower on quarter XX.X% and increased quarter, XX.X% activity production wells testament of to drilling of quarter. completion the $X.XX benefits compared per ARLP's ARLP's in fell quarter our to lower EBITDA lower to and a of reduction come effects energy compared It million impacts quarter oil not X.X%. EBITDA reduced revenues the expense and efforts XXXX XXXX the XXXX to declined year

several accomplishments. during achieve ARLP While to challenges experienced was we impressive able XXXX, certainly

capital million the morning, XXXX, financing capital Joe? operating approximately reduced down $XXX Joe. and by during call With we significantly million $XXX working million flow. to increased over approximately that, I'll turn now As release expenditures, in generated and leases, free noted paid requirements, of expenses and G&A, debt our this of total nearly liquidity $XXX cash

Joe Craft

morning to while segment, this the at comments performance everyone. Thank We our time, on extraordinary you, entered the significant growth same I'd in by my anticipating in open good people XXXX of prepared Minerals low reflecting our None demand the XXXX. its supply. like Brian, and to to morning, tepid and and impact us, gas energy coal have demand. natural challenging COVID-XX an co pandemic coal to however, prices, anticipated devastating markets of overhang could due of manage

markets grid have always help customers and ensure sheet, and our we an our met in succeed. the As unprecedented operate disruptions the protect organization, innovation head the and organization, these health support highest safeguard of including coal effectiveness people, the electric during the history serve. determination Alliance. The across the Despite clearly reliability encountered of as resilience, their rapidly performed teams year, entire our levels responding of balance our the best communities delivering to their to done, critical response of record the the we to to safety to our Alliance our prudently on, flexibility, safety at supplier essential entire so challenges the the mines demonstrated

the available. to will dedication, ARLP and and in across that all continues I tumultuous possibility that export demand higher of Cold this demand improve In and weakening disruptions improving the they as We their participation dollar international both and generation energy target primary by total in markets. LNG extend a hopeful sharply activity prices, increase well. Asia, the volumes trade a Europe and related such in year. my accomplished potentially all the thermal year, U.S. to supportive during gas economic For to are higher and are markets of power markets. supply increased point increased metallurgical to projections weather prices natural coal commitment vaccines and Conditions coal a as appreciation. enter increased U.S., continue our sincere U.S. Consequently, year-over-year XXXX, coal switching in of XX% producers become sales gas to disputes more

sales contracted the year. tons X.X our be in to quarter, During at this of coal lifting for midpoint anticipated XXXX, coal our of sales ARLP guidance commitments XXXX XX% delivered to million for the of

mostly the they greater than While were the contracted spot expiring than tons pricing prices, published contracts. newly for legacy were lower

average sales XXXX per we year's anticipate result, to last ton price from a to coal X% average. approximately decline As currently X% ARLP's

operating to expected efforts and Our expenses well. mines and their a capital continue as are great job XXXX reducing did to benefit during XXXX,

full EBITDA in expense a at million of currently Estimated of midpoint the the guidance we to to XXXX. last sold, capital $XXX adjusted year $XX.XX are ton year. per anticipate a our XXXX, approximately for $XXX to XXXX X% $XX comparable to compared segment range For of of million expenditures decrease

by reduction impact XXXX. significant drilling our in activities mentioned completion Brian during produced and continue For to earlier, XXXX, segment, in minerals will from that operators our volumes the Minerals

declines. for overcome has completion year, increased Although last the of to such impact dramatic the time activity improved drilling it historic from lows and experienced takes

segment will during from as of forward XXXX acreage year-over-year over result, Pricing half gradually XXXX natural a BOE our of anticipates XXXX total a the quarters As increasing if We and ARLP's realizations XXXX to commodity anticipate are curves outlook return year. this currently in modest sustained, Minerals current holder shown price EBITDA price the we ARLP two decline from liquids have from saw And quarter, the year. natural during this increase believe contribution strength a oil, gas and unit second supports recently. levels the year. volumes before higher distributions year-end gas XXXX currently we for the the first in our for

of distribution performance our and I conditions, based outlook financial whether results to unit consider and Assuming priorities. the amount factors, a in April. quarterly change, current future to will not and distribution management capital future with other outlook so at and as The determine expectations, declaring for business future recommend in as operating on any ARLP's allocation the its our next expect meeting first are well Board numerous will does do market the including Board quarter line holders

may bright success ahead, that we to otherwise. rhetoric critical a for the and headlines Low well-being despite our country. reliable Looking is see suggest energy and of future recent Alliance cost,

Alliance We high quality from of to in are them and a We plays these of will to products role that economy, outcomes delivers, natural the the supporting communities thriving remain for we of come. desired the flourish. believe living coal, ARLP that the years gas a to achieving benefit life to allows proud and oil essential firmly a standard of serve desires

of also new created likely power aware by the technologies. and to are We transition ongoing toward opportunities energy be the

various these long-term flows value, believe unit create we actively returns potential developing assets holder sustainable to cash cash growth. utilize to flow pursue seek opportunities As areas, from long-term our evaluating ARLP to existing to have is attractive the strategies we which generate the and in

concludes we protecting to assets, and sheet and balance pursuing cash evaluations balanced strategic execute will our returning manner, on in from opportunities, future on flows focused optimizing these opportunities crystallize, cash a As existing disciplined external That unit prepared long-term total to my stakeholders. and the attractive for holders, maintaining call ask generating I'll of access to the all operator capital open for markets comments, and questions. returns our now

Operator

session. Lin We will comes Our begin Shen Instructions] ahead. HITE. the now with from [Operator Please go question-and-answer question first

Lin Shen

Two questions, and Joe Brian.

you talk about administration, solar and maybe a lot a energy. we for more be First little utility the is, there's can wind new with bit going the to for heard of project discussions that the

So not but only from for demand so profile customers your more your energy? alternative what alternate to lot like your is natural closing the gas, a energy small, that are going also from expectations their of stay

Joe Craft

power put plants are the to because operator. load they they of contradictions many how demand for the Well, plants, administration are are to to over and some natural Obviously, We energy I two being going and find stop hand, a next policies influence be supply. available find the load advanced it that for technology there's and wind can But gas can operate decisions with to pipelines, solar the hard going to those transmission one put a policy units talking very a the load not know building plans. that needs building when stop to right the close we made. are other be don't change government it's now, our on the I want these without with much. want replacing base the know power units. is the decisions in planning intermittent about by in all believe generating not space, The as operating and coal operate systems that long-term designed that decades, to view made today to base those that length policies base those to we we're to assess really

goals. it complex they unfortunately, much a sound seems vision So their overnight as in the vision, is and that articulate, not as more they bites it are aspirational not it's situation, it's it's going is -- a like and happen to than very

anyone for find is a neutral can't that's power that I suggest realistic. would the that been fossil in target So of generation the space energy XXXX articulation

we have our the we're needed the that for more is as such opportunity be Yes. business, situation and it feel going will demand to think policy? be pro million-ton prefer would producer will a is -- you our low-cost of look energy product the So to the the we there's size, continue for XX plenty about practicality still But to When next when marketplace, demand. million-ton we're at for us, two decades. there so of a right We producer. that XXX

oil gas and the same. On it's side, the

contribute is the to emissions. only products oil that they that amazing They -- that gas is thing on one to. all focus me think focus on are and that I don't

cell the all to terms large move oil it look the fuels, when have phones quantities. and And of to up wind use solar States our in from think both products uses to when at fossil try not less all in United combine a gas energy Today, we whatever, simple it mining, trying away solution it's energy. permits all you of eliminating to with day you and and the just daily requires XXXX, made So economy requires that usage of than in transportation and X% fuels. every

So from just of over that was away we're think fossil that that to fuels XX% pie move is an chart expectation. unrealistic to going

lot in decisions, directed subsidies that the be of to transition. prepared business be do As a to will to there up lot opportunities my will money we I mentioned different try of remarks, of think these and a alternatives because policy speed there alternative

historically we'll be same to those a been the in that So we've way do. participate at looking can that able feel of we to get we returns type

going the in the we demand and next At and believe we're it's still for the gas decade to two. and oil energy same what and provide So, business. the cost strongly so develops sorry will We or look in anticipated time, ... at rapidly could more in subject, lower environment. day than at about in other alternatives the and talking the that We event current all technologies spend this to coal maybe

Lin Shen

I'm April second your Or no. view? share is what mean I That's in no, to just No, is that still I ask is mentioned guess trying the paying might distribution. a pain you you resume question your buyback? good. return to better in way dividend or like capital

Joe Craft

returning but look We're of utilize are going lot all do unit reason distributions why to we major at is to holders our a ways in allocation, capital units. believe that the

is that, return so And we definable evaluate our a feel or to participate investing try look when that's they can where an expectation. And shareholders exactly return at that capital company. they in how anticipate total of their

We in another. So we element one critical return. that, still that's shareholder some have believe buybacks is Share authorization.

buying table to our investing back assets. a a possibility, that's trying Everything on So grow paying possibility, shareholder debt, the bonds, is down far in as value. as growth as

Operator

ahead. Securities. question next Pipes from go with The Riley B. comes Lucas Please

Lucas Pipes

on open bit To the opening your this you would juncture. it or export is say extent of the a where what from XXXX, And this you little focus for opportunities extent say to to to export upside comes pockets a wanted potential market strengthening the market? outlook at up? I would are here

Joe Craft

entered the not much We our really in year market. export volume anticipating

arena as market. by disrupted a and the market. been think being couple growth the of in So, And as essentially come influenced mentioned domestic markets metallurgical Australia from things. think was our export The the thing of China had sales particular, anticipated in all the how I of in to in coal we I well thermal flows biggest both I October, the have dispute notwithstanding, that's

of Kentucky. not we in metallurgical took at that coal advantage more opportunities currently, created East that the because tons we for dispute booking a metco operation our some MC are space, U.S. necessarily producers, So that and has have PCI in

So, X that saw for little book less and to of the market less than more higher inbound we than we a booked XXX,XXX, to be to the than out the a volume. around weeks, Illinois calls. we've advantage a be region Even and two market that in to that thermal where physical little to seen little of the a bit tons opportunities, from book Basin some over or able were we million able API-X that little three we've market, though been physical market making the volatility take API-X than continues that region, last

demand or So, result question we're that a about is this really the been not China all a hard of of continuing to to positive but and disrupted coal feel it's that whether market, sustainable Australia flows it's as your whether and result dispute how of that of the that. have answer or

an opportunistic if able And feel time. we at transact can taking we're do then this attractive so. are we So, we in moment to that at will approach be prices

far that encourage it's thinking projecting there of sustainable, going is As bring supply terms to in us and to this as yet. that more on we're not believe

continue market Australia know least, from just don't we get evaluate tomorrow So this and at I and knows, because resolved will nobody the to five I China, see what whether don't happens know. now, that years people or

taking so. a it's look, on if prices, cautious but we're do to capitalize we're in there's that, being So, opportunistic opportunity attractive we'll where

Lucas Pipes

over on help Very just that now. the that The you met those helpful. for When month coal booked? referenced could sense last one were just thermal a get this. just three tons a follow-up export that export something us And maybe or quick that Was months occurred --

Joe Craft

as probably week, as middle of late and last say, was November earliest would forward. somewhere the I

Brian Cantrell

right. about That's

Joe Craft

Yes.

just year, year, XXX,XXX when were had Illinois XXX,XXX mean, Appalachian what Basin. over little So we I about a tons, in last XXX,XXX we you compare last in to and

that. exceeded already we've So

more bit that, little do has more the feel on where a that we also we're and side, sustainability. As metallurgical

into targeting are XXX,XXX about tons sell And that market to so we more.

over that market. XXX,XXX a into booked already little tons we've So

this was compared last to XXX,XXX year or something. sell we're another year. to around So, looking XXX,XXX It

Lucas Pipes

that be in well? And your would embedded as outlook XXXX

Joe Craft

for Yes. embedded The sales in targets guidance. is our

Lucas Pipes

is years. coming lower then very XXXX last say Very expenditures, I you you. kind How much a temporary? would that helpful. few at And of you're when look spending that. would you over running budget at for describe more Is adjustment capital XXXX I like the sustain you Or looks level levels? that's the the to Thank this about Thank price you capital environment the years? an think very efficient when could for that it levels a

Joe Craft

we So, 'XX from having were excess mines benefited closed. that both equipment in 'XX and by

ton we XX went North other So, at idled ton Gibson when producer units operations. a we million million we XX from and producer. couple Obviously, idled a of

So, effectively excess equipment some number. we've benefiting got that's that

I if we we'll we believe -- then and level, think see. production another can over the for or at sustain this year stay And next this so.

Lucas Pipes

it. then one for Got And it. Got one me. last

to you that Just response you be think evolving. would broad do what that's very that in opportunities hear might you kind consider it a it's Could question you a where so curious that And well. in and where back you still supply just think you'd that Lin's your if I space, most -- you're explore alternatives the there? any like be most fit -- of I'm extension? the to of narrow you down, you'd energy. obviously, further as investments decide sounded natural

Joe Craft

demand started can whether we've be areas of or investigating premature different we're plenty little market haven't kinds decided you in to five space that as We've competencies we that two that all have to just it's investigation publicly. you then battery truly, It's the at process moves the EV a but going do different opportunities of to three, looking where And establishing got explore. and or things whether to in the of already tell we are seven. core it side. different teams, to to technologies want areas there's of it, transmission at fast identified does, internal to name discuss of batteries we that I as on we EV if the increased the we're storage

beyond it's to of do just oil trying trying fit, expand the we using and on and it's royalties think sets in royalties So have. whether whether those we where power best to in determine EV on terms the I whether gas side, coal. we're it's side, skill and

a I is just to investing all the there out look there shareholder. being created. get So, facts of for trying plenty people those mean, returns find and that ways to at

own coming up spec, setting So, got spec start with what I it. cash we thinking, we're not we flow that got and can but guess can we this the in do we've our

looking we're of a So, at everything. little bit

Operator

with The next Shelly comes question Loomis ahead. from go McNulty Sayles. Please

Shelly McNulty

you considered just load, to base does is That's base needed power. about picture, capable were base many better state stay how load total back tons that given in the bigger of of kind the to what how wind see going like of the and power load you kind steady question. of understanding, percent base that power about talked my solar First, coal aren't talking translate load would to and first of be the supporting supply? I

Second question into gas is on the expansion other outside of energy. coal, of forms natural

you're you new financing the like considering? your or done be it something as that? Just like current is revolver in on would Is plan financing, have financing wondering whatnot? under place, you that utilizing Or transition Thanks. forms bond, how of such

Brian Cantrell

take last one the I'll first.

will key financing be think component. I a

decision, now, allocate free we arena, that. would going component. then a our we how we focus is but do terms in And critical So financing in of that that having forward right be cash now is, think flow right as looking of

and if or we So see outside and finance if going flow to understand going any financing use equity be our way cash might groups, it want be bank our we're in maybe it than is think what of if of that it to in. of might available of you this of some just to other as some can banks are growth, try lenders capture to that

to to to the the got the think power transmission consistent at generation, to feeding those I and to delivered. charge requires through advanced the grid power those really of it of those trying way interruptible transmission simple question, it advised once XX% lines going interruption, been lights meaning allows be needed you a to without discussions. receives lines, minute-by-minute more lines very interruption, far want, of to the American haven't that transmission is reconsideration that spent that Back designed on of is what a with is the first is basis, part electricity. be but go complicates they for it is therefore, it the which that the regionally, look your was some of they on the how have and to is to We say efficiency in without and generation you you of assure much what on or that the efficiently electrons it I've get unreliable when base walk those through allow switch, room public turn without round transmission no is outs, the load designed, capital when

all if today, the and way energy used grid the of we that with try would charge expect. the So, to know intermittent are to unreliable grid you we function not the power,

down so all trillions dollars generation. want base it, on depending consideration transmission wide make you people load hours of on be shut topic to with want three the with have meaning that reliable But into two scale this to practice, once you've get to into in a -- to to energy upgrades, to take make or in region. how got again, get region products how without, by the and was wind, you certain could spreads timing of weaves that of solar has I taken you're fast and how is non-reliable theory, talking the So you what

Shelly McNulty

there said, you actual think give guys facts bit more might things appreciate got and kind I being snippets that could think probably put to core like out are only like it these then the Okay, comments information and on be more nauseam, overall. for ad it. the to educate talk I can provide you you And support get statements, it's actually more about the supporting of aren't would somehow a industry and I these nitty-gritty there and though about, fact people little talked that of you education, good

Joe Craft

So, belong to is trying an we that Americas the that called on do American organization to educate Power public subject. the best

someone like to that need just are we to it. interested understand So, you

I XXX% out comments. heart take we're agree with well-founded trying, saying. your what I and So, to there but very They're you're

Shelly McNulty

So or about. don't start maybe you talk group to know, something should I a Reddit guys

Joe Craft

understand I that's really Maybe, good it. idea. don't

I think a move I don't know. it's good to markets, It idea. seems

Operator

[Operator investor. go ahead. Joe Our Instructions] who [ph], a Please Pisano comes from is next question private

Unidentified Analyst

that gas Yes, have there's the enough you say in natural don't large such gas, big they're institution, and such I you because for my gas do. told, -- a winter there's build. to they're in really demand better oil, a know area, They're switch gets cold might and and power, because natural

Now this so pipelines a down not and they closing is is small starting How how start scale. the notion stuff?

Joe Craft

the And and fossil just on believe overnight. know happen is Biden you they get fuel. don't Yes, truth to fuels I'm to fuel I to that natural gas why transition to obviously, administration to we still not needs then exactly not has the it a non-fossil to a nuclear knows sure. know can been that. rely environment, going I that. It to have we bridge say continue be. on technology. If vision just Unfortunately, that is can't

Unidentified Analyst

If good on do closing city pipelines in nationwide, everything, my this and my to going it work? That's point. if like do you how this --

Joe Craft

Well, they comments different that really while. of game to say, a And they rounded one it's -- political for is always and campaign always hear they I govern. little the

to Administration you at And Biden campaigning that to from got moved some guys governing. don't point you in start governing. stop I think the So and has campaign time,

that to America's the the implementing that article how think lot that you and these an threatened published There was for start name get the by all go. you're don't a to perspective, you say starting to through it's question because point allow it work. want not they're fuel bites to those you it next CNBC change determining go and the complexity the Eric it see physically that they'll will is And or where to on most be truly from fuel I time just you workers, by from off takes to the read impact a practicalities, goes get think that or interesting was lot practical lives, steps aspirational through believe climate gets whether -- battle their it's I difficult to bit where not the you're that transition heating the the executing asking have So consequences oil how And if guy the in but into of to to I'm I'd the to one sound that is strategy night in Rosenbaum hearing you raising, think administration by tell. and the what but going when when just you harder not starts that when grounded last meet examples they're will unintended lights can from one about realistic. a going that Biden's people's we're the campaign plan is like premises day you move overnight to to can that

Operator

closing would turn Brian This any session. concludes our back conference Cantrell like for to remarks. the over to question-and-answer I

Brian Cantrell

Alliance. your everybody's and this Tom. appreciate of support continued as as Thanks, morning We time well interest in

results is and our for your first time. at call and call you'll us Thanks our quarter This Our XXXX occur that currently join April, for discuss expected to next again to we in operating everyone concludes to hope today. participation. late financial

Operator

The conference for today's you attending now Thank presentation. concluded. is

may disconnect. You now

Alliance Resource Partners (ARLP) 1 Feb 212020 Q4 Earnings call transcript