Poor Fourth Quarter Results
Alliance Resource Partners LP ARLP witnessed a downturn in shares following the announcement of disappointing fourth-quarter earnings per unit and sales results.
The company reported a significant 11.2% Y/Y drop in revenue to $625.4 million, missing the consensus of $661.9 million.
Various factors led to the revenue decline, including lower coal and oil & gas prices, as well as decreased coal sales volumes. Coal sales price per ton sold experienced a sharp 10.7% Y/Y decrease to $60.60, chiefly due to a decline in Illinois Basin export pricing.
Additionally, segment adjusted EBITDA stood at $203.2 million, down 35.5% Y/Y, and earnings per unit of $0.88 fell short of the consensus of $1.14.
As of December 31, 2023, the company boasted a total liquidity of $492.1 million, including $59.8 million in cash and cash equivalents.
The company also completed $24.8 million in oil & gas mineral interest acquisitions in the quarter, leading to record BOE volumes.
Future Projections
FY24 Guidance: Alliance Resource Partners LP expects coal sales volumes to be in the range of 34.0 – 35.8 million short tons.
Joseph W. Craft III, Chairman, President and Chief Executive Officer, expressed optimism, stating, “We are entering 2024 with over 90% of our coal sales volumes committed and priced at similar levels relative to 2023. We are expecting our production to be more consistent in 2024, believing we have moved beyond the several negative geological areas that we faced in 2023.”
He added, “We expect to complete the major infrastructure projects at Tunnel Ridge, Hamilton, Warrior and the River View complex in 2024. ARLP will start to recognize the benefits from these strategic investments in 2025 as total capital expenditures will be significantly lower and these mines will be more productive, ensuring we maintain our position as one of the most reliable, low-cost producers in the eastern United States over the next decade.”
“We are forecasting domestic natural gas prices to rise in 2025 as new LNG terminal capacity comes online, driving an increase in natural gas exports, benefitting both our Coal and Royalties segments.”
Current Status
Distributions: In January 2024, the company reported quarterly cash distribution of $0.70 per unit, or $2.80 per unit annualized, payable on February 14, 2024, to all unitholders of record as of February 7, 2024.
Price Action: As of the latest check Monday, ARLP shares are down 4.98% at $20.68.
