ARLP - Earnings call transcript Q1 2022 | Alliance Resource Partners, L.P.

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Operator

Greetings. Welcome to the Alliance Resource Partners, L.P.

First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. this being note Please Instructions] conference recorded. is [Operator conference your and host, will Financial now Cantrell, to the turn President I Brian over Senior Officer. Chief Vice Thank you.

You begin. may

Brian Cantrell

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

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

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

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

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

call to comments. Officer, Chief results of President Chairman, then begin out Joe with With and Craft, I Executive review over way, our the quarter the preliminaries will his the required turn for for our of the and a

quarter. operating outlined financial XXXX for our compared metrics XXXX and key strong morning, to to this quarter the reported and As the Alliance increases in release

XX.X%, respectively, and and volumes For posted Board rose as the the sales the XX.X%, to increased and and compared volumes coal and all for quarter. ARLP across oil royalty XX.X% coal as production gas XXXX respectively, and quarter, XXXX sales XX.X% volumes climbed

also due per climbing lock We sales the X.X but increases with XX.X% jumped quarter, These coal greater, ongoing EBITDA sales commodity increasing increasing price gas BOE XX.X%, maintenance, XXX% royalty over jumping XXXX during income even quarter, of XXXX realizations, would’ve the per before XX%, saw significantly challenges XXXX XX.X%, volumes million river and for and respectively, and the coal oil levels ton. prices taxes Reflecting transportation ARLP’s revenue per high barge revenues, quarter. higher price X.X% XXXX and to been and seasonal total also during higher income coal shipments and ton tons during delayed the quarter. experienced rail prices

be partner the expected quarter million $XX by coal $XX per shipments $X.XX $XX While the they limited or net in income our coal revenues balance year, to approximately and are by million, by million of unit. these delayed reduced over delivered the XXXX EBITDA

$XX.XX by quarter. expense the per adjusted $XX.XX On in the in per XXXX compared cost to quarter to ton XXXX ton, segment the increased EBITDA ton per side, XX.X%

As $XX.X Hamilton, were a at partially costs numerous also Operating impacted revenues, related long-haul result higher maintenance and quarter. income the offset or expense mines. of the costs. partner inflationary $X.XX moves XXXX $X.XX expenses and Mettiki for $XX.X items, XX.X% income quarter or compared to Reflecting by per in our limited and including increased net Ridge per million supply unit pressures partner to by labor and XXXX operating increased on million Tunnel limited unit, tax expense,

unit. collectively of non-cash of deferred gas operating fall quarter. sales by which XXXX X.X% $X.X reduced segment tax minerals, shipments gas increased of $XX.X a compared recognized the million volumes partner income coal tax coal by a week, Minerals as income last to coal before to for realizations tax quarter, and the lower ARLP Alliance ton. sales expense expense oil $XX.XX taxed. current pass sequential sold. at to activities X.X% limited higher XXXX price into to This the XX.X% $XX.X the revenue expect in entity improved though and a and million taxes corporate and convert even sales unitholders. is from lower delayed offset compared into total mentioned. revenues ton or million reported to additional would quarter, that and operating As Compared million ARLP’s the cash by I as state free X.X% reinvesting coal a sequential will we taxable per oil the These the Since to adjusted pay grow decreased on one-time charge entity per oil royalty in for holding quarter, Alliance primarily result by for at the net that our we the due expenses to royalty our paid tax sequential of double reduces quarter, reflect X.X% below we $XX.Xm revenues, unitholder expenses company entity as and segment to Total individual volumes cause gas total flow election effectively reduction $X.XX tax X.X%, not income corporate the partnership total be Minerals, income EBITDA do to and income a coal charges volumes per sequentially, rates more a to intend Lower coal Lower result tax election ARLP income a revenues be $XX.X previously reduced taxable than by our from leading LLC, recent rates federal level burden tax taxes otherwise income level through royalties to gas well the oil individual our purposes. by

attributable impact in $XXX.X in change $XX.X of earlier. due compared tax sequential with Although to the in approximately ARLP income taxes quarter. segment & quarter, at quarter $XX.X to higher the to to EBITDA Royalties Gas net expense quarter our a million XXXX the million in was the trailing status of in total $XXX.X reduce ended I discussed to to million XXXX tax income Oil the further decreased compared sheet. to income sequential liquidity look quarter million increased adjusted $XXX.X XX.X% times X.X balance our quick leverage the the million and XXXX Taking EBITDA. of

anticipate Finally, the expectations. price our also week, strong through outlined as full initial year its well updated commodity has last We we environment above current will guidance. year of continue XXXX levels the that ARLP

planned demand and sales to customer with now by operations coal delivery volumes have XX% priced of sales approximately response Our increased tons committed XXXX. volumes for XXX,XXX and in strong in

initial coal guidance provided We ton January per expect price to above this XX% our sales of to market year. XX% in be ARLP realizations will the the

Although, year supply improved full chain leading our operating with and line margins currently challenges operating to expect will pressures be continued initial from in inflationary a concern, costs remain we expectations, coal.

than production oil, from year, higher. into sold. revenue gas the increase pricing, Our Pricing should has natural gas to revenues of Similarly, liquids natural should E&P on With Royalty benefit higher tons beginning our volumes meaningfully of – we per business Gas for & expected should coming also Royalties and be the should our benefit and increased royalty business ARLP’s operators better coal royalty expectations Oil increased prompting XXXX. perform significantly since acreage.

Joe? cash generation expectations and full I’ll year the our surpass ARLP’s performance for result, a year over operating ARLP. and XXXX. financial flow this turn should outlook on and for call Joe for his markets With As comments initial that, to the

Joe Craft

good everyone. and Brian, you, Thank morning,

As of you ARLP just heard set growth pandemic importantly in changed the from were has The coming global year since the that series defense as for expansion and demand more Energy we markets experienced that increased. Brian, strong even released into led XXXX forward. outstanding already last quarter the stage economic continued for we January. much historic to power looking in earnings results post

institutions globe invasion quarter manifest by by supply the energy but the XXXX conditions supplies improved to pandemic, financial and fuel around caused unfolded, partly pressures, even challenges, fossil by in itself, influenced As inflationary shortages due disruptions. under impacted further. of chain oil commodities strongly Sanctions flow worldwide transportation the Russia, creating global impact on also governments to natural The Ukraine began of decisions since shortages, policy the XXXX following climate investment production and coal, further were and of and gas. labor the of imposed market disrupted

twofold for approximately purchases ban over recent national markets in five-year accounted XXXX jump up in of security With across XX% the and contributed ramping – incentivized EU are prices gas on to the expense natural gas, the exceeded XXXX imports particularly European XXXX generation and the power strongly environment. to buyers natural of world and on coal a levels. Union the High factors world’s to at due in average which from the generally have security, Russian a central excuse coal U.S. me, coal-fired XXXX, commodity around importance All in reacted coal, consuming countries India sources March the global focus thermal coal international in of and China Europe. alternative to and are prices supply Coal-generation prices these current of a global freedom. levels. unprecedented European have coal. by renewed markets coal dramatic driving energy of the two-thirds the announced thermal international on increase the focus

perspective, environment in in war somewhat the has due market From than muted. for had Ukraine, exporters more market the the in should this U.S. provide to past. of However, influence have we their coal stability a been current

international is volatile. APIX market While extremely remains the the index reflected by

ton our We current updated you, currently guessing around so seeing right more are being supporting the stable should We physical the per year globe prices in sale the the and now. of commodity with XXXX estimates our recognize coal and full turmoil price market difficulty guidance.

believe at going with elevated is levels and last conflict there However, conflict Russia for Unfortunately, will it as bit longer. appears long I as is quite energy to a this prices Ukraine. be

the is export will both the market with for caveat, over months. prices thermal coal that XX remain metallurgical our least than U.S. So higher domestic at the and next view

we in our ARLPs sold volumes reach higher million we up prices more we to remain additional than expectations likely a million than year. a our tons will export projecting XXXX, by increase market coal export uncommitted X to domestic correct most those most little expect volumes are the will X.X be this next an to in As into lifting year. tons markets, result, of If for export

so be up setting RMPs environment domestic suggesting be fierce by X% buyers, Production shoulder to summer into year. to moves, chain strong those extremely demand the to as continued back for to unable XX.X% for and of replicate strong suppliers to higher due well cooling the our for heading to our to providers. our do utilities supports supply. of competition historically years seems have the Staffing the issues, natural used inventories quarter. prices, we coal response global gas term fuel inflation, gas low as sequential will domestic and XXXX was saw have and what discussions XXXX, we the economically of impacted next but operations power season with been one market, this facing transportation are season, are market curve though than These in this Turning at environment high Initial current higher struggling pricing their spring several the the coal. of quarter to COVID-related impressive year-over-year numbers free current in the restock absenteeism manage domestic longer year. year, long-haul challenging heading we security achieved, continued stockpiles, which supply this the into environment, next pricing circumstances. expected and dispatch remain actively forward half In indicate rising seeking natural customers The shortages, than issuing the to were utilities took even

Mine increase our new since led operation, MC quarter XXXX. XXXX. since Tunnel best since it best opened in five X its South best million Our Ridge quarter tons had XXXX. achieved Gibson their at number And than QX its QX quarter was producing slightly in production QX by which Mining’s more

the this industry with annualized paying of meaningfully are sales years, fuels, is Unless especially don’t likely recession, believe stay do rest workers quarter’s guidance production stays decade. exports finding Likewise, a for not our strong We producers be anticipate attract U.S. coal several Therefore simply a there it we or to This increase new total over the year. will wages. supports difficult we by response fossil this global other for along next. year coal commodity demand impacting there higher increase will either. production our by to seems will pricing the severely LNG committed it supply the next if for

we ton margin earlier, prices, XX% XX% levels, approximately buoyed XXXX realizations compared mentioned are ARLP’s XX% our increase XXXX XXXX. Brian operations we higher compared by coal sold. increase to anticipating tons price XXXX per As per by expect to to to sales XX% segment from EBITDA volume and currently XX% should And to adjusted increased

While and too also fundamentals will we topping margins year. grow market comments, the segments. Pricing for our quarter, with earlier tons & & upon and for meaningfully exceeding Strong natural gas my positioned $XXX market Oil benefit Gas natural $X export determine sold is based gas during Coal by Revenue it to earlier Royalties XXXX are per guidance, and XXXX for much. from again improved should barrel oil oil MMBtu. the how well next

to discipline. production also our ARLP’s higher permitting some ton benefit to While our royalty financial expectations. initial royalty exhibit revenue segment from coal robust have exceed result to of coal completion operators markets activity, driving Increased discussed The commodity to higher expect sold. flows led acreage a earlier and drilling as on per accelerate cash continue prices

Our last royalty record results segments even year, XXXX. market and conditions support with expect favorable better delivered in results we financial

X.X% Royalties & and price support in and year X% be mining total NGLs will royalty volumes revenue expected XX% we also volumes compared operations favorable a to to increase higher prices our with forward XX% higher Gas XX% BOE XXXX. For price ton curve likely will increase coal segment, Anticipated most believe year. royalty sold for segment, from this Royalties oil Coal to in last realizations our increase expected sales for sales to to benefit gas approximately to should tons ARLP’s compared much and natural Oil and

favorable remaining and well As beyond. indicated XXXX by returns to deliver cash solid fundamentals extremely market unitholders. and ARLP’s our updated guidance our to attractive and with growth for positioned

for year to our by of unitholder management increases XX% Board view over pleased balance per this support XX% to XX% the increasing unitholders sequential year. upon full ARLP’s guidance, are by distribution quarter. is that Based targeting to the We management’s elected cash our will over quarter distribution of flow flow distributions what the the calls. also investments these and recent for earnings strengthening Distributions have strong of our levels growth to at capital that still balance allows cash support discussed and Therefore supports ratios allocation growth in available we similar sheet. cash higher

best you utilizing cash of strategy our uses is uses our outline developing the we free flows want have to discussed areas. months, ARLP’s verticals. pursue way I help explain future Over cash assets our the to to cash understand transition last I flow, goal five to on have XX this in stage our current in of strategy. energy our consider at from strong The existing thoughts thought opportunities To of

we yield well our return is XXXX, cash attractive has of Every since to has unitholders we distributions an quarterly in – flows investors. sustainable started for to approximately creating growth free our distributions strategy estimated before and our excuse on IPO flow The this, to through year-over-year. allocation cash COVID-related since centered year, been success disruptions, restarted been on first we our distributions. investments. after Since for XX% do cash focused distributions vertical have annual growth To providing me, covered

Assuming, we level this our for with we at achieve consistent XXXX, will results guidance year. that be again

vertical our second maintenance for the capital be The requirements co-operations. will support to

competitive cost advantage. return will our efficiency maintain We to high low invest in projects also

coal addition, expertise. In to beyond other competencies, on in of we opportunities minerals capitalize mining include will our our thermal and to mining metallurgical coal consider core one industrial

cash this due Third mineral business and on additional continue our focus of part flow to gas reinvesting we primarily from oil acquire segments, generated interest. growing the plan royalty our

Design another type can in XXXX example described Matrix to includes Matrix release other flow to of NIOSH in that also this subsidiary exploring opportunities in more segment. repurposing to one business signs a cash technology. investments. segment be lead VAI An OmniPro We We equipment will that our Visual this the assets. establishing our recently royalty projected has operator mobile as is press expand launched a to of Intelligence invest Group presence. cells fully issued five award-winning use growth path morning. The we and the of has within fourth so. over This by are investing may grow camera the or their XX next the stop objects help is Artificial travel safety by times alerts and the people of such products is Matrix uses think five detect OmniPro units, system times of to years to potential manage to

to and potential our and Matrix modest on power charging, renewable is an includes sustainable by strategy energy one that capable development could on team focused our metering areas is generation, focused can to this energy This adding assets demand we on Oil deploy efficiency, Other Gas EV basis ARLPs a smart of similar long-term We talent management. The also standalone providing new amount segment. growth fifth result by Royalties attractive technology & of in smart capital broader will of built energy investments, a cameras, investment or vertical we workforce expenditures. management how storage, for achieve returns growth. manage

earnings two investing partners recall, out to again, the may in other the minerals business, after a in you then funds buy potential GP directly we I As minerals. decided the in II in and to XXXX. by XXXX, limited seeing underlying we as the limited And for and in own started AllDale this AllDale these manage of partner

investments then, more. this to other several plan and since do to made space have We in continue

why like record our performance model. we this total quarter’s segments for royalties affirms This

a did achieving long is an sold business be we gas objectives, XXXX, hand, model that that for pursue. other the This On return. business not fit our investment, too pursue. could natural Once to we attractive ARLP could we line business we compression in term company thinking of gas the decided compression invested with in a a

decision strategic believing sustainable cash invested realize invest the on at attractive capital. flows non-coal in to made have we assets, returns We can

As to for we and our to strong these opportunities, a pursue balance maintain and sheet best strive remain the long term our steadfast we decisions will holders. unit commitment make

continuing of the are several areas I growth lines, we to along While outlined. just explore

XXXX, we the operations dependent these our has these than to our within to within to both has evaluation investments. months recently to today, however, seven sectors, reference, companies, an be organization. than these its was announce A We is company companies the you provide been years. of progress transition. Infinitum are coal of Energy in tangible recently of significant broader upon Electric, our Alliance the Infinitum completed growth our We software, and technology and with filing analytics, development investment two The powerful Group fifth ability Francis Critically excited expanding with one to next for The in look and their execution. will million other hardware, and to making they Matrix efforts Since offerings, on mining invest all which strong areas. XX its above Electric. expertise up on manufacturing Matrix are AI, Matrix, are they each being in transition unitholders are XXX ongoing in When investments plan in of focus begun details to of and focused the but and upcoming not $XX vertical. positioned believe the safety subsidiary. operations. three Electric combining XX focused four our entrepreneurial enhanced Combined, technology Matrix and provide at context the rather SEC. Energy returns skills more this all by Francis component Design leverage quarterly only deploying data Infinitum manufacturing of align provided investments key the innovative accelerate into platform, Initially technology of professionals With place, of enhance support underground Francis uniquely and will over productivity embedded the skills in and it. energy the we Matrix developing, investments in the the

changes and with additional energy growth. leverage ARLP customers, state avenues the the necessary U.S. infrastructure opportunities As revenues the industrial to also relationships electric and create create will utilities, grid governments its we continues, to for believe power to federal and transition for or

of And fuels call prepared evolve, to allow invest us value our We ARLP so, term doing needs energy opportunities in creating providing As now the meet meeting continues the questions. comments. and the to remain the long concludes future of for to to well the we energy on that needs to the focused our essential profitably are stakeholders. will energy committed to to operator is of today That benefit. for positioned ask And tomorrow. I’ll open the

Operator

comes The with first [Operator the from with of question. Company. you. question Our Nathan Benchmark line Thank Please Instructions] proceed Martin your

Nathan Martin

my Joe, morning questions. good for Brian, taking Hey, thanks

Joe Craft

Good morning, Nate.

Nathan Martin

the sounded would Thank about like thoughts many two you and obviously go and you. talk wide guess likely have to can price XXXX I open at as market where I pretty you open export market prices lower a million prices those maybe those it the or today big still you you updated the upper tons, what the do just tons of leads you the to range. any how I’m other guys put showing see assuming, guidance, your have look factor the last end first guys remarks goes where coal curious you even there? roughly I’m range. prepared of sales you but, tons out that week, rest

Joe Craft

Right.

quarter, end in tonnage at right the of the two additional wrote million, have April. some we at sold So we

It’s We on reflected the the export seeing. are targeting we’re of markets. also reflective range volatility wide is transportation. The

work do that. and the that be we can we few able, the maybe days if market have supports at extra we So, to needed range a the upper midpoint to assume will the transportation if

would – volumes of export, could revenue back in of [indiscernible] some that to some could some affect and in of sales and range. it lower on So tons that’s require some transportation, the year. the delay upper transportation range the with If the delay into the roll the next

average for of reflected the it’s wide tonnage could our be range we amount it’s the price that only just commodity, of you’re sales would So the on of price sell. when pricing, that thinking but not

midpoint if reflected thinking it’s answer price with that with values, the sort question? if tons on we midpoint makes would sense, that the be sales your were of So, being combined focused at. average what our those well current already for committed pricing, wherever export our are, supported the you of in and If at that priced sort prices of

Nathan Martin

Yes.

I helpful. mean, think and where or, you that’s And of I net are there? are guess domestically markets? export both backs what prices I out today Like kind seeing

Joe Craft

in not talk again, would about because that, I we’re I defer to really to the a prefer those guidance. negotiating guess one Well, in position that other every do make day. I reflect, And They question. is point

We [ph], is have XXX,XXX prices. tons unpriced. that’s targeted of those factor another influencing metcoal That that’s

So obviously higher we’re quite market the steam market. met we bit a also, than the seeing in prices,

So that’s influencing another that. that’s factor

Nathan Martin

you any you maybe well, I helpful pricing you give on as ahead new would price exports. committed XXXX, Thank additional but also X.X to million called in through agreements million that. be you X of It X.X and tons out of I still and tons tons appreciate it. those there. for that, it’s tons understand you. just XXXX, probably and million the look to about additional, as released clarify negotiations us guys last to idea like wanted quarter you’re Got part guys since including

Joe Craft

term into Well, one – and XXXX. that. been X.X identified, had had some me rolled that were restate part let long from are of over, long XXXX we that tons contract some that million has rolling of that the some they so XXXX. export over price XXXX for were We Yes, tons

at of but some be prices So lower will now, that’s than the we’re seeing million that of what out X.X there. reflected

the there’s year. is UI for million next (X:XX:XX) X.X I and X.X into priced that’s XXXX XXXX that for think tons

of as I our pricing, to So, earlier, those, margins we mentioned terms as we expect think the do in expand.

our domestic So market in year. that the when negotiations we’re believe And of be than now. about average this for now in I which all the middle you the XXXX, for price utilities. think We higher be we right will year our can expect terms with will next of do price think we that’s give average I where all right

Nathan Martin

very strategy. that’s it’s to the on that. mean, cash your transition, And, but of details And And on also guys investments coal energy have your morning. get look also, space, comments those whether to really any just remain then growth with called to on referenced, Appreciate companies investment mining I investments, that some how invested exciting use you different in on or helpful thoughts distribution? when further should No, get helpful, some how out sure. as finally you you do much with the of Joe. there one, energy still transition in number your ahead like, It to balance and this side you you make distribution sounded growth growing wanted your

Joe Craft

Right.

still we’re So free again, at and XXXX that through looking flow our at cash targeting distributions XX%.

quarterly flow term. somewhat we basis. that’ll available in near be the by a determined be have investment on board It’ll cash Now, and, might or really whether more next have the also a we change we that opportunities what on year, decision into moving importantly what

the we There XX next amount to over would two As investments Those or mentioned are it determine a less the potential whether months. have $XX the in committed. are announcing marks, today whether that prepared that it’s consume be conditions something full million than the we’re that.

continuing how will cash the – to we for flow. as to at balance that reinvest we plan We’re is we minerals, look numerous I’m opportunities

a got that’s million of this there, this all is targeted and is levered. $XXX So around that equity. None we’ve

that. happen space, efficiency that we’ve are have probably what investments coal. that’s could within we’re this that potential investments the in some have do adding on with reflect have in mineral targeted I royalty year, Matrix either space. got some that occur We year. non-coal, term. do the as We debt and additional this the projects in pay fit vertical, looking cash invest the flow down that And last the that fit we’re at a to other pursuing other that we also looking operation near could There’s So to we’re considering any few

way we it. look So that’s the at

plants really could I would consider company. what as focused with like energy that on policy, what’s what to release the about foreign press need are are was put there America, strategy not government with far regulations just on on what’s a actors with was relaxation the Europe that environmental impacting energy reassess And policy MISO. think in or of dependent few on going developed of We capacity if pause, fleet. worrying right year, suspension policy. quite regulations in trying our fired the to their our I we’re MISO Europe the that a the this to their the so best close government as And how coal around they next that of recently grow leaders summer. interest desperately power So, or believe for are in are down and their that no thinking current that slow as very generation or did American for there’s Europe? out board the to

of next coal the, a decade on where for war we move back going prior in our down about backdrop the sure it. to supply earlier the know, have in So of to part But know I on that to they concerned I that before pace faster the of is shutting the it’s, prepare utilities decade. they’re the with talking to this administration or in PJMs think know you that to Ukrainian own want make need if were to it, terms reliability that country. pace they or plants concerned about there’s in our hopefully we half

got. of energy we there’s opportunities that’s that that with free be to flow lot transition, going the cash why with and the for investment feel So we’ve a

that to next are XX I generating assets the focused the where growth targeting some can grow will that have to what period. on we’re be We’ve to time flow got year-over-year We so for that’s cash continue by great we XXXX to doing. mean XXXX, years. try

So no away assets, not flow, timeline, are our those, optimize fossil we to other trying on go live depends within just trying our soon. of fuels. it’s than to make world fossil there’s we believe going anytime take sure fuels care current The cash to

the through see didn’t wave People particular adequate to problems greater the price people want their that care have their in than suffering India they they wouldn’t if heat going the fuels. now got fossil take right needs. and need don’t seeing with paying We’re We ever. are these because they’ve capacity is of that really be

that believe So But I economy. is be and that five the where that to the for our space auto lifeblood be manufacture fuels energy world has prepared three to got will the there EVs next a long time. of in EV and other And of opportunities been continue made there sector commitments to the like significant years. fossil the to has are you over out

much feel people we opportunities understand space. and are successful last that to plan had in those to that as returns like can can we we’ve for years. risk the So can take the that advantage of competencies to XX we and energy be what where presents manage of within core over the We with that the we the similar

Nathan Martin

Very going helpful, we on Clearly a lot Joe. as know.

forward. going there. it So as I of luck I’ll your Best thoughts time always. appreciate and leave

Brian Cantrell

you, Thank Nate.

Operator

Please Reichman next Our Markets. with with the comes of question Mark from Noble question. your Capital proceed line

Mark Reichman

about and morning. you’re the support curious in were utilities thinking what And is I the cetera, Matrix. terms about the thought and prepared are talk Good in you interesting. the transmission I how specifically just if bit energy facilities, the opportunity for of grid release a for was your commentary kind could grid Matrix little the that you transition of with just working and et opportunities to how about

Joe Craft

of that grid U.S. energy grid as intermittent current yes, a Well, we was as renewables the think designed I the percent the not for become know larger sources.

a getting those take are the just because expect a challenge people through you that companies the you have have, that would lot the process. what pipeline getting going need great has lines. update than to longer We go believe see FERC to transmission So same permits, transmission people hear to approval,

to that what living lines think So is able we’re pre-energy transmission renewables. to being fast the of I necessary to crisis based with. is anticipated as all be again, growth that’s on as higher the support this redevelop And

be but desired So there could appears. transition still change that there’s and

of more the for at sources. to thinking need on the type rely on the same and not be energy also done will some there trying is of is any fossil bit but we main a battery intermittent, grid storage utility, about a could the by do you that grid for battery is industrial rely done little because obviously storage, fuels only there would but intermittent be for what at at that users transmission at the so storage. and is time, and when slower But having mean think that to currently of can that So about lines, I the backup. Matrix the the move are backup what looking one be focuses pace, the what

primarily area well as as the focused we’re that’s on looking at. that there So

Mark Reichman

kind of it it’s… Was

Joe Craft

Yes.

Mark Reichman

way one is Management at? that of looking

Joe Craft

the Yes. trying be energy products certain we manufacturing solar that, looking one Its And EVs. of for at we’re looking for the yes. transition, low the because right manufacturing now is to whether way should then be or is see other you components at, area it is solar China dominate management

on totally there minerals So country, they’re focuses dependent so energy opportunities opportunities multiple the may chain of that this the components may China, a areas supply slash for be be transition. on that bringing as strategic not in America of manufacturing there manufacturing to

Mark Reichman

made constraints those it in And then lost I quarters was and transportation expecting kind lumpy volumes to the have constraints expect up up then you mean, year? – transportation the during and second it be the are third make also how or tonnage at balance you that will to the point? to due this first how of over of dissipated quarter mostly coal Will do be the the those

Joe Craft

Yes.

We’re seeing improvement in transportation. the

release, really we improvement. we’ve started seen writing So is the actually since

the bit that the parts. it but out over transportation wood weather, little high a delays One it laid balance of abated. in two have The would be quarter. now, the second heavier of sort right knocked had was year, were we may be So those on waters,

and barge. it’s the So impacts side not of able more rail than significant But to we make the those were was. shipments it’s some by by and the but travel be, for on to have it want the we it being that high volume not the do capacity impacted improved, where better waters up to that has

up we’re real stepped with stepped that based to April in in then And looking sort and even March seen January, its of projected step May, up it in in and even so we’ve conversations at. then more up that the on railroads no February, our more progress

second just has the a So if we’re new, believe how criteria quarter that investment this transition, then energy of we the we kind your have the in a kind comment on in and these acquisitions. your very immediate clearly investments aren’t probably go returns you’re out do will than maybe a on just ago. could of larger evaluating But your risky do of you acquisitions, you’re returns. week how this existing percent energy changed how kind maybe for as businesses investment – do with reward. you thought that the transition? And is investments and you of those new what And Because or criteria making good versus risk around the returns longer-term think about about

Joe Craft

Right.

right. So you’re

I less to seems expecting think and return doable better space, And coal risk be that we make within prices right depending how that are the on stay. maybe even in is predictable on four they’re than these investments would a threshold three that more years. the to now, those payback returns

that’s good So thing. a

standards had side, prices. underwriting commodity On maintain we’ve we to our that in the this mineral up tried run before

at I’d in still for standards, the ones. hunt we’re we’re different We’re that say looking lot a close even things. but underwriting of with our several

or expectations what of of that yes, back pipeline the that terms where can maintain pricing? the the to in We to and in that And trying much it think can risk And capacity. we one we prices at look think have underwriting think production successful still on. – I things actually pipeline grow the there assets. standards understand that and I how bring does can profile is that our do industry think are fast how capacity So needed. be more so to we and return Therefore, you acquiring when is what

two the return approached haven’t those expectations investments we’ve So or way or changed really it.

we’re things we to commitments as as have look what organically. in at We much we we do stuff. to people. do make Matrix, that don’t far As can doing to capital buying What have is grow invest those

predictable – cash cash working or XXXX their easily other within since there’s some flow those a capital so, their capital so bit like there what get and products on from but and five cash the R&D it’s And R&D early And and in the years be. we’ve we and And originally have its do we also manufacturing If into little last has they’ve there, of flow. that in some they’re our but got lived returns issue. want as life, we family it internal Matrix of more over funded been in their flow. prospects those be can funded are to would to the be could modeled more things, think totally

latter they really and EBITDA not – two we would Because growth. a operation the for position, how had once be your think cetera, making to think that so you monetizing an way head not et of growth very how that they so. we you as at et you for on. rate reach would then just we hardest. to so great contracts, be just trying at both understand announced strong supply event would how a typically your mean, feel multiples like based component, But a that opportunity somewhere the discounted cash that manage, invested you would lock is in impact then investments model reasonable could off way it I growth think about energy of to at anticipate it’s last And opposed we’re I do are shareholder you in the their how vertical flow I look cash cost demand, the how opportunity they transition the that the our today, would accounting is cetera. those that we investment be that there we And look an the of looking

it’s So at but to one the that it’s we, day we the Kodiak again, investment all what looked done, different made. we’ve dissimilar not and than or way two too

control to in way you just will our looking don’t will what take to years either shareholders their do returns those us be redeploy XX from it that type we’re then the judgment companies multiple will we’re five we time, businesses, they from more have all at the of or get. your allow but now, that you and benefit we decision they think believe do to now. of model, point on to that’s for like road, some that who you that. the in knows down that’ll other But you look the be do So And things years and you capital And business will recognizing use what on at that. – capital from think and what at we can return have projections where

So helpful. hopefully, that’s

Mark Reichman

a And kind that energy bets at put amount one in two in versus of kind sizable you of three out kind stage, of trying was the kind point of enough of terms opportunities. the or of at any maybe a maximum kind I helpful. a already kind that’s over to And to building you’re past investors what areas certainly difference Infinitum the at acquisition? of I was very a so where think like between few – of trying but areas. just that different you’ll probably a bunch exactly build opportunity investments, what that Is putting exploratory on would that that’s bag stake on. what and where in a the identified Or probably scale that there kind a continue I to That’s maybe looking of concentrated participate want Energy, is. or make to range it’s kind than ground in transition. easier or of Francis acquisition. in focus equity kind to of understand looking But paths to And risk very you’re of wide Are or you you of seems investments – you’re

Joe Craft

yes, before the in four will – be there will mean, we I five, that verticals and think Yes. I – we run. walk

not huge anything. to we’re be putting So on bets going

I in that’s our say, larger would think not segment, in metal see would we segment were coal that a it’s to or an business mineral similar & that a then or mine a mineral, investments our or mining if buy you possible will would in see not coal-related oil decide to possible we – in met the the industrial there and/or invest on would another gas what working you to the investments rule in that bet space the general they’re things these on – rule that But to – could It’s be the that they we’re EV going I larger investment. be small company. several that be a small depending relatively company.

the betting We’re definitely to company. be not going

is replace replace we than their it that any in I of hearts doing they sell states if team their got going allows We’re is to cash I looking And they’re it the time, want well at attractive going cost cost, to compliant alternatives, at what be going our that going XXX% taking XXXX. my plants that’s to so the only equity, fully they’re manage within price. management at they’re our in because because with we’re can from we’ve trying to money. needed we I flow think got when they’re to to a shut to government, us the with? thing meaningful. maintained, bandwidth the the am And substantial the without are believe investments we’re that that keep they But customers And they that have well, invest down know say, no same and more time, to low operating, debt. coal laws, move not we’ve on XXXX, – at coal they’re fortunate we our run environmental them plant, levels they It’s all that more And anything their know to too with fast.

at to living. dealing one as think things citizens policy still number that if to to increasing far the government the to levels voters policy go that cost wake expensive the making this the So, wants U.S. on would when issue to understand of they’re more trying their start of government as are mind, impact up, you reinvest inflation they’re continue are in with that

Mark Reichman

Well, Yes. helpful. thank you very very much. That’s

Joe Craft

Thank you, Mark.

Operator

proceed with your the Rodriguez comes Please from line Stonegate Markets. of question Marco Capital with next Our question.

Marco Rodriguez

taking you my questions. morning. Good Thank for

Joe Craft

Marco. morning Good

Marco Rodriguez

of about? transition couple quick opportunities Morning, they if the came or of bit can how Can on take of sourced comment making investments a go ups, from two a made it to investment? the first the you the And those also space. – kind that kind surrounding of follow in commitment how I sort look maybe the here to you little to you about long initial how took energy were have talk kind new you

Joe Craft

this them two as could that ago, interested by be would think. how on So had And to someone thought they I to understand were introduced us. be innovative that technology years Infinitum utilized we to we

the product, everything a had meet at got We on do company nothing we with And thorough the had, for management to and we do current did at we liked we invest. the cetera. not so round et invest but in where the wish company. team, but the the were was doing, not the what they stage and evaluation, that uncertainty else did given time. we we the with our I’d to early the were It had market game, that around of to our we And COVID with given of liked very just with owners say circumstance the going had

round and then year. had in this fundraising touch kept of we them, with they So another

that. we elected so participate And in to

how that’s So evolved. that

utility can do came you, contacts years. the stations. to support at electricity to industrial be years objectives looking in of the for We’ve supplier of recognition utilities were been we’ve things been and opportunities we of that to And customers for to for gone the been to not the said, the find help years, How that. XX We to years As these purchases? can how listen, have suppliers two and related us our we conversations grow? our through space, want we’ve these far utility we’ve our things as sell to automakers do those out coal a and EV XX, meet customers next help your to and charging going talking your last

in Oklahoma. Tulsa, that known management members I’ve Francis. their I’ve with of Francis; familiar parents. known were question for several So to being us We raised the they

known I’ve long families time. So, the for a

in when decided were that interested was we capital and do, that they to some So, we we something meeting. this a we wanted out reached heard raising and had

spent four know, probably we months. I don’t And last so

Brian Cantrell

Four, five months.

Joe Craft

understanding detail, work real And In how good driven. together? about months. in they’re line? their we They’re that that. are they how And What the developed and these about five help They’re our their relationships so We they’ve that’s we’re excited of capable. people. or got Yes, Four are? Where foot are? going? holes What further could And And where them we east. that excited very can we’re opportunity. think with Midwest. thoughts

Marco Rodriguez

mean you like you’re about technological can to something might for areas. you of do of a or Very prepared discussed of was attract need how question in on if talk difficult bit that people that the competencies of of to have to group trying those if it. you the helpful. And be Got Does to branch it can last And remarks, to those wondering that. into you Matrix, add or me difficult kind so, that not sort and your kind for people? going particular confirm capabilities? pivot I availability little or sort expand different to maybe or ability the heads out

Joe Craft

those We’ve already areas. in added leadership the

for we’ve studying proven in success once OmniPro leadership it had space. the for and for for But strong that out analytics, the got AI that quite we’ve software, while. hardware, product. We’ve So, like and been selling a

do then is down need that our we XX Then So, have to can we how So and achieve more what goals. scale the we and type to to of sit and staff say, realistic want talent set goals. have little – we as do those And we to bit grow we and how recruit achieve then okay, to to times, we aspirational goals do that? how five a do those determine, come objectives? And we get to okay, times? do back what we to available,

there. out we’re So,

or through XX involved live students manpower’s are the And we’re – that for finding young related, school colleges, to even build opportunity recruiting, businesses people the they they’re opportunity out and operating, communities through years have high to to building we’re in like but entrepreneurial. there stem people schools, last trying for it’s networks that stem people where the are present. to explain being tough, that that and as we’re like to trying and educated We’re we so been the in

that in challenge, that place a tell that it’s goals me achievable, be So but plans and needed in that, place like we’re in they putting they the we’re will that folks those that businesses. guys, and putting recruiting are the my are successful the to feel grow

Marco Rodriguez

I Thank time. Understood. for your really guys appreciated. you

Brian Cantrell

Thanks Marco.

Operator

Ladies and question-and-answer I reached gentlemen, Cantrell session. for the announce to Brian end the we the have turn call remarks. closing will of over

Brian Cantrell

continued you, and this as morning, time support Alliance. well Thank interest everyone’s as Alex. appreciate We your on

This and Thanks hope ARLP’s discuss to early again August, participation is time. for that call quarter currently for you’ll to we to support continued concludes today. results and operating XXXX and everyone expected at join your occur call next on of Our financial ARLP. second our us

Operator

And day. you lines This you this wonderful concludes time. have today’s at your And Thank conference. your a for disconnect may participation.

Alliance Resource Partners (ARLP) 2 May 222022 Q1 Earnings call transcript