What changed in this filing

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Item 1. Financial Statements

2021-08-06 compared with 2021-05-07 · 111 added, 48 removed, 511 unchanged (24% of the section changed)

61 unchanged sentences

Three Months Ended

Six Months Ended

SALES AND OPERATING REVENUES:

5 unchanged sentences

Transportation expenses

Outside coal purchases

General and administrative

4 unchanged sentences

INCOME (LOSS) FROM OPERATIONS

Interest expense (net of interest capitalized for the three months ended March 31, 2021 and 2020 of $ 86 and $ 557 , respectively)

Interest expense (net of interest capitalized for the three and six months ended June 30, 2021 and 2020 of $ 105 , $ 509 , $ 191 and $ 1,066 , respectively)

Interest income

2 unchanged sentences

INCOME (LOSS) BEFORE INCOME TAXES

INCOME TAX BENEFIT

INCOME TAX EXPENSE (BENEFIT)

NET INCOME (LOSS)

NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTEREST

NET INCOME (LOSS) ATTRIBUTABLE TO ARLP

7 unchanged sentences

Three Months Ended

Six Months Ended

NET INCOME (LOSS)

9 unchanged sentences

COMPREHENSIVE INCOME (LOSS)

Comprehensive income attributable to noncontrolling interest

Comprehensive loss (income) attributable to noncontrolling interest

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ARLP

5 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

9 unchanged sentences

Payments under securitization facility

Proceeds from equipment financings

Payments on equipment financings

12 unchanged sentences

Cash paid for interest

Cash paid for income taxes

SUPPLEMENTAL NON-CASH ACTIVITY:

23 unchanged sentences

● References to "Alliance Coal"

mean Alliance Coal, LLC, the holding company for the coal mining operations of Alliance Resource Operating Partners, L.P.

mean Alliance Coal, LLC, the holding company for our coal mining operations.

● References to "Alliance Minerals"

mean Alliance Minerals, LLC, the holding company for the oil and gas minerals interests of Alliance Resource Operating Partners, L.P.

mean Alliance Minerals, LLC, the holding company for our oil and gas minerals interests.

● References to "Alliance Resource Properties"

mean Alliance Resource Properties, LLC (the land holding company for certain coal mineral interests of Alliance Resource Operating Partners, L.P.) including the subsidiaries of Alliance Resource Properties, LLC.

mean Alliance Resource Properties, LLC, the land holding company for certain of our coal mineral interests, including the subsidiaries of Alliance Resource Properties, LLC.

ARLP is a Delaware limited partnership listed on the NASDAQ Global Select Market under the ticker symbol "ARLP."

2 unchanged sentences

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts and operations of the ARLP Partnership and present our financial position as of March 31, 2021 and December 31, 2020 and the results of our operations, comprehensive income (loss) and cash flows for the three months ended March 31, 2021 and 2020.

The accompanying condensed consolidated financial statements include the accounts and operations of the ARLP Partnership and present our financial position as of June 30, 2021 and December 31, 2020, the results of our operations and comprehensive income (loss) for the three and six months ended June 30, 2021 and 2020, and cash flows for the six months ended June 30, 2021 and 2020.

All intercompany transactions and accounts have been eliminated.

8 unchanged sentences

LONG-LIVED ASSET IMPAIRMENTS

During the three months ended March 31, 2020, we recorded $ 23.5 million of non-cash asset impairment charges in our Illinois Basin Coal Operations segment due to sealing our idled Gibson North mine, resulting in its permanent closure, and a decrease in the fair value of certain mining equipment at our idled operations and greenfield coal reserves as a result of weakened coal market conditions.

During the first quarter of 2020, we recorded $ 23.5 million of non-cash asset impairment charges in our Illinois Basin Coal Operations segment due to sealing our idled Gibson North mine, resulting in its permanent closure, and a decrease in the fair value of certain mining equipment at our idled operations and greenfield coal reserves as a result of weakened coal market conditions.

During the same period, we also recorded an asset impairment charge of $ 1.5 million in our Coal Royalties segment due to a decrease in the fair value of greenfield coal reserves held by Alliance Resource Properties near our coal mining operations in the Illinois Basin.

3 unchanged sentences

GOODWILL IMPAIRMENT

During the three months ended March 31, 2020, we considered whether an interim test of our consolidated goodwill of $ 136.4 million was necessary.

During the first quarter of 2020, we considered whether an interim test of our consolidated goodwill of $ 136.4 million was necessary.

Our consolidated goodwill included $ 132.0 million recorded in our Illinois Basin Coal Operations segment in conjunction with our acquisition of the Hamilton County Coal, LLC ("Hamilton") mine on July 31, 2015.

9 unchanged sentences

This impairment charge reduced our consolidated goodwill balance to $ 4.4 million.

During the three months ended March 31, 2020, we also performed an interim test on ARLP's remaining goodwill balances not associated with Hamilton and concluded no impairment was necessary for our other reporting units.

During the first quarter of 2020, we also performed an interim test on ARLP's remaining goodwill balances not associated with Hamilton and concluded no impairment was necessary for our other reporting units.

CONTINGENCIES

17 unchanged sentences

The following table summarizes our fair value measurements within the hierarchy not included elsewhere in these notes:

March 31, 2021

June 30, 2021

December 31, 2020

19 unchanged sentences

On March 9, 2020, our Intermediate Partnership entered into a Fifth Amended and Restated Credit Agreement (the "Credit Agreement") with various financial institutions.

The Credit Agreement provides for a $ 537.75 million revolving credit facility, reducing to $ 459.5 million on May 23, 2021, including a sublimit of $ 125 million for the issuance of letters of credit and a sublimit of $ 15.0 million for swingline borrowings (the "Revolving Credit Facility"), with a termination date of March 9, 2024.

The Credit Agreement provides for a $ 459.5 million revolving credit facility, including a sublimit of $ 125 million for the issuance of letters of credit and a sublimit of $ 15.0 million for swingline borrowings (the "Revolving Credit Facility"), with a termination date of March 9, 2024.

The Credit Agreement is guaranteed by certain of our Intermediate Partnership's material direct and indirect subsidiaries (the "Restricted Subsidiaries") and is secured by substantially all the assets of the Restricted Subsidiaries.

1 unchanged sentence

Borrowings under the Revolving Credit Facility bear interest, at our option, at either (i) the Base Rate at the greater of three benchmarks or (ii) a Eurodollar Rate, plus margins for (i) or (ii), as applicable, that fluctuate depending upon the ratio of Consolidated Debt to Consolidated Cash Flow (each as defined in the Credit Agreement).

The Eurodollar Rate, with applicable margin, under the Revolving Credit Facility was 2.97 % as of March 31, 2021.

On March 31, 2021, we had $ 21.8 million of letters of credit outstanding with $ 461.0 million available for borrowing under the Revolving Credit Facility.

The Eurodollar Rate, with applicable margin, under the Revolving Credit Facility was 2.71 % as of June 30, 2021.

On June 30, 2021, we had $ 21.8 million of letters of credit outstanding with $ 437.7 million available for borrowing under the Revolving Credit Facility.

We incur an annual commitment fee of 0.35 % on the undrawn portion of the Revolving Credit Facility.

4 unchanged sentences

The Credit Agreement requires the Intermediate Partnership to maintain (a) a debt to cash flow ratio of not more than 2.5 to 1.0, (b) a cash flow to interest expense ratio of not less than 3.0 to 1.0 and (c) a first lien debt to cash flow ratio of not more than 1.5 to 1.0, in each case, during the four most recently ended fiscal quarters.

The debt to cash flow ratio, cash flow to interest expense ratio and first lien debt to cash flow ratio were 1.43 to 1.0, 8.67 to 1.0 and 0.39 to 1.0, respectively, for the trailing twelve months ended March 31, 2021.

We remained in compliance with the covenants of the Credit Agreement as of March 31, 2021 and anticipate remaining in compliance with the covenants.

The debt to cash flow ratio, cash flow to interest expense ratio and first lien debt to cash flow ratio were 1.08 to 1.0, 10.66 to 1.0 and 0.20 to 1.0, respectively, for the trailing twelve months ended June 30, 2021.

We remained in compliance with the covenants of the Credit Agreement as of June 30, 2021 and anticipate remaining in compliance with the covenants.

Senior Notes.

12 unchanged sentences

The Securitization Facility was previously scheduled to mature in January 2021.

On March 31, 2021, we had a $ 38.1 million outstanding balance under the Securitization Facility.

On June 30, 2021, we had a $ 38.1 million outstanding balance under the Securitization Facility.

May 2019 Equipment Financing .

16 unchanged sentences

We utilize the line of credit, as appropriate, for capital expenditures and investments.

As of March 31, 2021, we had drawn $ 1.8 million under this agreement.

As of June 30, 2021, we had drawn $ 1.8 million under this agreement.

VARIABLE INTEREST ENTITIES

26 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

10 unchanged sentences

February 14, 2020

May 14, 2021 (1)

(1) On April 26, 2021, we declared this quarterly distribution payable on May 14, 2021 to all unitholders of record as of May 7, 2021.

August 13, 2021 (1)

(1) On July 26, 2021, we declared this quarterly distribution payable on August 13, 2021 to all unitholders of record as of August 6, 2021.

Unit Repurchase Program

2 unchanged sentences

The unit repurchase program authorization does not obligate us to repurchase any dollar amount or number of units.

No unit repurchases were made during the three months ended March 31, 2021.

No unit repurchases were made during the six months ended June 30, 2021.

Since inception of the unit repurchase program, we have repurchased and retired 5,460,639 units at an average unit price of $ 17.12 for an aggregate purchase price of $ 93.5 million.

1 unchanged sentence

Change in Partners' Capital

The following tables present the quarterly change in Partners' Capital for the three months ended March 31, 2021 and 2020:

The following tables present the quarterly change in Partners' Capital for the six months ended June 30, 2021 and 2020:

Limited Partner

11 unchanged sentences

Balance at March 31, 2021

Comprehensive income:

Actuarially determined long-term liability adjustments

Total comprehensive income

Common unit-based compensation

Distributions on deferred common unit-based compensation

Distributions from consolidated company to noncontrolling interest

Distributions to Partners

Balance at June 30, 2021

Limited Partner

2 unchanged sentences

Total Partners'

Income (Loss)

(in thousands, except unit data)

10 unchanged sentences

Balance at March 31, 2020

Comprehensive income (loss):

Actuarially determined long-term liability adjustments

Total comprehensive loss

Common unit-based compensation

Distributions from consolidated company to noncontrolling interest

Balance at June 30, 2020

REVENUE FROM CONTRACTS WITH CUSTOMERS

2 unchanged sentences

(in thousands)

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Oil & gas royalties

3 unchanged sentences

Total revenues

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Oil & gas royalties

3 unchanged sentences

Total revenues

The following table illustrates the amount of our transaction price for all current coal supply contracts allocated to performance obligations that are unsatisfied or partially unsatisfied as of March 31, 2021 and disaggregated by segment and contract duration.

Six Months Ended June 30, 2021

Oil & gas royalties

Coal royalties

Transportation revenues

Other revenues

Total revenues

Six Months Ended June 30, 2020

Oil & gas royalties

Coal royalties

Transportation revenues

Other revenues

Total revenues

The following table illustrates the amount of our transaction price for all current coal supply contracts allocated to performance obligations that are unsatisfied or partially unsatisfied as of June 30, 2021 and disaggregated by segment and contract duration.

(in thousands)

8 unchanged sentences

Our participating securities are outstanding restricted unit awards under our Long-Term Incentive Plan ("LTIP") and phantom units in notional accounts under our Supplemental Executive Retirement Plan ("SERP") and the MGP Amended and Restated Deferred Compensation Plan for Directors ("Directors' Deferred Compensation Plan").

The following is a reconciliation of net income (loss) attributable to ARLP used for calculating basic and diluted earnings per unit and the weighted-average units used in computing EPU for the three months ended March 31, 2021 and 2020:

Three Months Ended

Six Months Ended

(in thousands, except per unit data)

7 unchanged sentences

Diluted EPU excludes all potentially dilutive units calculated under the treasury stock method if their effect is anti-dilutive.

The combined total of LTIP, SERP and Directors' Deferred Compensation Plan units of 1,237 and 851 for the three months ended March 31, 2021 and 2020, respectively, were considered anti-dilutive under the treasury stock method .

The combined total of LTIP, SERP and Directors' Deferred Compensation Plan units of 1,525 and 1,397 for the three and six months ended June 30, 2021 , respectively, and 661 and 654 for the three and six months ended June 30, 2020, respectively, were considered anti-dilutive under the treasury stock method .

WORKERS' COMPENSATION AND PNEUMOCONIOSIS

1 unchanged sentence

Three Months Ended

Six Months Ended

(in thousands)

2 unchanged sentences

Interest accretion

Valuation loss (gain) (1)

Ending balance

(1) Our estimate of the liability for the present value of current workers′ compensation benefits is based on our actuarial calculations.

Our actuarial calculations are based on a blend of actuarial projection methods and numerous assumptions including claims development patterns, mortality, medical costs and interest rates.

The valuation gain in 2021 is due to an increase in the discount rate from 1.95 % on December 31, 2020 to 2.34 % on June 30, 202 1 .

We conducted a mid-year 2020 review of our actuarial assumptions, which resulted in a valuation loss in 2020 due to unfavorable changes in claims development and a decrease in the discount rate from 2.81 % on December 31, 2019 to 2.05 % on June 30, 2020 .

We limit our exposure to traumatic injury claims by purchasing a high deductible insurance policy that starts paying benefits after deductibles for a claim have been met.

1 unchanged sentence

Our workers' compensation liability above is presented on a gross basis and does not include our expected receivables on our insurance policy.

Our receivables for traumatic injury claims under this policy as of March 31, 2021 are $ 7.1 million and are included in Other long-term assets on our condensed consolidated balance sheet.

Our receivables for traumatic injury claims under this policy as of June 30, 2021 are $ 7.1 million and are included in Other long-term assets on our condensed consolidated balance sheet.

Certain of our mine operating entities are liable under state statutes and the Federal Coal Mine Health and Safety Act of 1969, as amended, to pay pneumoconiosis, or black lung, benefits to eligible employees and former employees and their dependents.

1 unchanged sentence

Three Months Ended

Six Months Ended

(in thousands)

8 unchanged sentences

or notional units, also referred to as "restricted units", may be granted which upon satisfaction of time and performance-based vesting requirements, entitle the LTIP participant to receive ARLP common units.

Certain awards may also contain a minimum-value guarantee payable in ARLP common units or cash.

Certain awards may also contain a minimum-value guarantee payable in ARLP common units or cash that would be paid regardless of whether or not the awards vest, as long as service requirements are met.

Annual grant levels, vesting provisions and minimum-value guarantees of restricted units for designated participants are recommended by Mr.

7 unchanged sentences

If it is not probable the financial tests for a particular grant of restricted units will be met, any previously paid DER amounts for that grant are reversed from Partners’ Capital and recorded as compensation expense and any future DERs, for that grant, if any, will be recognized as compensation expense when paid.

A summary of non-vested LTIP grants as of and for the three months ended March 31, 2021 is as follows:

A summary of non-vested LTIP grants as of and for the six months ended June 30, 2021 is as follows:

Number of units

3 unchanged sentences

Non-vested grants at January 1, 2021

Non-vested grants at March 31, 2021

LTIP expense for grants of restricted units was $ 0.7 million and $( 0.7 ) million for the three months ended March 31, 2021 and 2020, respectively.

LTIP expense for grants of restricted units for the three months ended March 31, 2020 includes the reversal of $ 4.8 million of cumulative previously recognized expense for the 2019 Grants, which were

determined to be not probable of vesting, offset in part by related DERs for the 2019 Grants previously recorded to equity and then expensed.

The total obligation associated with LTIP grants of restricted units as of March 31, 2021 was $ 2.1 million and is included in the partners' capital Limited partners-common unitholders line item in our condensed consolidated balance sheets.

As of March 31, 2021, there was $ 5.1 million in total unrecognized compensation expense related to the non-vested LTIP restricted unit grants that are expected to vest.

Non-vested grants at June 30, 2021

(1) 921,430 units and 896,760 units have a minimum-value guarantee of $ 2.53 and $ 3.79 per unit, respectively, regardless of whether or not the awards vest.

LTIP expense for grants of restricted units was $ 1.4 million and $ 1.6 million for the three months ended June 30, 2021 and 2020, respectively, and $ 2.1 million and $ 0.9 million for the six months ended June 30, 2021 and 2020, respectively.

LTIP expense for grants of restricted units for the six months ended June 30, 2020 includes the reversal of $ 4.8 million of cumulative previously recognized expense for the 2019 Grants, which were determined to be not probable of vesting, offset in part by related DERs for the 2019 Grants previously recorded to equity and then expensed.

The total obligation associated with LTIP grants of restricted units as of June 30, 2021 was $ 3.5 million and is included in the partners' capital Limited partners-common unitholders line item in our condensed consolidated balance sheets.

As of June 30, 2021, there was $ 14.6 million in total unrecognized compensation expense related to the non-vested LTIP restricted unit grants that are expected to vest.

That expense is expected to be recognized over a weighted-average period of 2.1 years.

On April 22, 2021, the Compensation Committee also authorized additional grants of 1,833,190 restricted units, of which 1,818,190 units were granted.

The new grants are subject to both a service and performance requirement and contain minimum-value guarantees.

Supplemental Executive Retirement Plan and Directors' Deferred Compensation Plan

8 unchanged sentences

All grants of phantom units under the SERP and Directors' Deferred Compensation Plan vest immediately.

Total SERP and Directors' Deferred Compensation Plan expense was $ 0.04 million and $ 0.3 million for the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021, there were 760,630 total phantom units outstanding under the SERP and Directors' Deferred Compensation Plan with a weighted average grant date fair value of $ 22.04 per unit and a total intrinsic value of $ 4.4 million.

As of March 31, 2021, the total obligation associated with the SERP and Directors' Deferred Compensation Plan was $ 16.8 million and is included in the partners' capital Limited partners-common unitholders line item in our condensed consolidated balance sheets.

A summary of SERP and Directors' Deferred Compensation Plan activity as of and for the six months ended June 30, 2021 is as follows:

Number of units

Weighted average grant date fair value per unit

Intrinsic value

(in thousands)

Phantom units outstanding as of January 1, 2021

Phantom units outstanding as of June 30, 2021

Total SERP and Directors' Deferred Compensation Plan expense was $ 0.1 million for the three months ended June 30, 2021 and 2020, and $ 0.2 million and $ 0.4 million for the six months ended June 30, 2021, and 2020, respectively.

As of June 30, 2021, the total obligation associated with the SERP and Directors' Deferred Compensation Plan was $ 16.8 million and is included in the partners' capital Limited partners-common unitholders line item in our condensed consolidated balance sheets.

COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS

4 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

5 unchanged sentences

(1) Net periodic benefit cost for the Pension Plan is included in the Other expense line item within our condensed consolidated statements of income.

During the three months ended March 31, 2021, we made contribution payments totaling $ 3.3 million to the Pension Plan for the 2020 plan year.

During the six months ended June 30, 2021, we made contribution payments totaling $ 3.3 million to the Pension Plan for the 2020 plan year.

As a result of certain pension plan contribution relief provided by the American Rescue Plan Act enacted in March 2021, we do not expect to make additional contributions to the Pension Plan during 2021 or 2022.

29 unchanged sentences

(in thousands)

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Revenues - Outside

4 unchanged sentences

Capital expenditures

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Revenues - Outside

4 unchanged sentences

Capital expenditures

Six Months Ended June 30, 2021

Revenues - Outside

Revenues - Intercompany

Total revenues (2)

Segment Adjusted EBITDA Expense (3)

Segment Adjusted EBITDA (4)

Capital expenditures

Six Months Ended June 30, 2020

Revenues - Outside

Revenues - Intercompany

Total revenues (2)

Segment Adjusted EBITDA Expense (3)

Segment Adjusted EBITDA (4)

Capital expenditures

(1) The elimination column represents the elimination of intercompany transactions and is primarily comprised of coal royalties paid by certain of our coal operation entities to Alliance Resource Properties, sales from the Matrix Group to our mining operations, coal sales and purchases between operations within different segments, sales of receivables to AROP Funding, financing between segments and insurance premiums paid to Wildcat Insurance.

5 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

Segment Adjusted EBITDA Expense

Outside coal purchases

Other expense

4 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

5 unchanged sentences

Interest expense, net

Income tax benefit

Income tax (expense) benefit

Net income (loss) attributable to ARLP

2 unchanged sentences

SUBSEQUENT EVENTS

Other than the events described in Notes 10 and 14, there were no subsequent events.

Other than the event described in Note 10, there were no subsequent events.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements