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Alliance Resource Partners (ARLP) – Solid First Quarter; Outlook Remains Bullish

Natural Resources
0 min read

Tuesday, May 03, 2022

Alliance Resource Partners (ARLP)
Solid First Quarter; Outlook Remains Bullish

ARLP is a diversified natural resource company that generates operating and royalty income from coal produced by its mining complexes and royalty income from mineral interests it owns in strategic oil & gas producing regions in the United States, primarily the Permian, Anadarko and Williston basins. ARLP currently produces coal from seven mining complexes its subsidiaries operate in Illinois, Indiana, Kentucky, Maryland and West Virginia. ARLP also operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana. ARLP markets its coal production to major domestic and international utilities and industrial users and is currently the second largest coal producer in the eastern United States. In addition, ARLP is positioning itself as an energy provider for the future by leveraging its core technology and operating competencies to make strategic investments in the fast growing energy and infrastructure transition.

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Solid first quarter performance. Alliance reported first quarter net income of $36.7 million, or $0.28 per unit compared to $24.7 million, or $0.19 per unit, during the prior year period. The company generated EBITDA of $152.3 million compared to $94.3 million during the prior year period. Results would have been stronger had it not been for transportation constraints that hindered the company’s ability to ship approximately 1.1 million tons of contracted tonnage during the first quarter. These shipments are expected to be delivered throughout the balance of the year. Additionally, financial results were negatively impacted by a $37.3 million one-time non-cash deferred income tax expense and liability to convert the holding company for ARLP’s oil & gas royalty activities, to a corporate taxable entity. Excluding the one-time tax item, adjusted EPU were $0.58.

Updating estimates. We have increased our full year GAAP and adjusted EPU estimates to $3.10 and $3.40, respectively, from $2.85 and $3.15. Our estimates reflect continued strength in commodity prices. We forecast 2022 adjusted EBITDA of $744.6 million and distributable cash flow of $515.1 million….

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

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