Wednesday, August 03, 2022
Alliance Resource Partners (ARLP)
Stellar Second Quarter Results; Outlook Remains Favorable
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.
Banner second quarter performance. Alliance reported second quarter net income of $161.5 million, or $1.23 per unit compared to $44.0 million, or $0.34 per unit, during the prior year period. The company generated EBITDA of $243.8 million compared to $118.6 million during the prior year period and free cash flow increased 5.1% to $83.5 million. Revenue and gross margin were above our estimates. Second quarter financial results reflected higher coal sales prices and volumes which increased 43.3% and 13.9%, respectively, along with greater oil & gas royalty prices and volumes which rose 64.7% and 27.6%.
Updating estimates. We have increased our 2022 EBITDA and adjusted EPU estimates to $945.3 million and $4.85 from $759.2 and $3.45, respectively. Our estimates reflect continued strength in commodity prices and greater oil and gas royalty volumes. We have also increased our 2023 EBITDA and adjusted EPU estimates to $1.1 billion and $5.75. What stands out are visible sources of volume growth and margin expansion potential through at least 2024 which support return of capital to unit holders in the form of cash distributions and/or buybacks.…
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.
