What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-04 compared with 2021-08-06 · 109 added, 62 removed, 560 unchanged (23% of the section changed)

4 unchanged sentences

(In thousands, except unit data)

September 30,

CURRENT ASSETS:

41 unchanged sentences

Total liabilities

COMMITMENTS AND CONTINGENCIES - (NOTE 4)

PARTNERS' CAPITAL:

12 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

SALES AND OPERATING REVENUES:

12 unchanged sentences

INCOME (LOSS) FROM OPERATIONS

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 expense (net of interest capitalized for the three and nine months ended September 30, 2021 and 2020 of $ 123 , $ 199 , $ 314 and $ 1,265 , respectively)

Interest income

2 unchanged sentences

INCOME (LOSS) BEFORE INCOME TAXES

INCOME TAX EXPENSE (BENEFIT)

INCOME TAX EXPENSE

NET INCOME (LOSS)

NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTEREST

NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

NET INCOME (LOSS) ATTRIBUTABLE TO ARLP

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

NET INCOME (LOSS)

9 unchanged sentences

COMPREHENSIVE INCOME (LOSS)

Comprehensive loss (income) attributable to noncontrolling interest

Comprehensive income attributable to noncontrolling interest

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ARLP

5 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

5 unchanged sentences

Distributions received from investments in excess of cumulative earnings

Escrow deposit for oil & gas reserve acquisition

Net cash used in investing activities

9 unchanged sentences

Payment of debt issuance costs

Payments for taxes related to net settlement of issuance of units in deferred compensation plans

Payments for purchase of units and tax withholdings related to settlements under deferred compensation plans

Distributions paid to Partners

40 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 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.

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

All intercompany transactions and accounts have been eliminated.

41 unchanged sentences

Inventories consist of the following:

September 30,

(in thousands)

3 unchanged sentences

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

June 30, 2021

September 30, 2021

December 31, 2020

8 unchanged sentences

Debt Issuance Costs

September 30,

(in thousands)

13 unchanged sentences

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 2.71 % 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.

The Eurodollar Rate, with applicable margin, under the Revolving Credit Facility was 2.68 % as of September 30, 2021.

On September 30, 2021, we had $ 23.3 million of letters of credit outstanding with $ 436.2 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 1.08 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.

The debt to cash flow ratio, cash flow to interest expense ratio and first lien debt to cash flow ratio were 0.95 to 1.0, 11.60 to 1.0 and 0.10 to 1.0, respectively, for the trailing twelve months ended September 30, 2021.

We remained in compliance with the covenants of the Credit Agreement as of September 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 June 30, 2021, we had a $ 38.1 million outstanding balance under the Securitization Facility.

On September 30, 2021, we had no 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 June 30, 2021, we had drawn $ 1.8 million under this agreement.

As of September 30, 2021, we had drawn $ 3.2 million under this agreement.

VARIABLE INTEREST ENTITIES

11 unchanged sentences

Bluegrass Minerals' equity ownership of Cavalier Minerals is accounted for as noncontrolling ownership interest in our condensed consolidated balance sheets.

In addition, earnings attributable to Bluegrass Minerals are recognized as noncontrolling interest in our condensed consolidated statements of income.

In addition, earnings attributable to Bluegrass Minerals are recognized as noncontrolling interest in our condensed consolidated statements of operations.

In February 2017, Alliance Minerals committed to directly invest $ 30.0 million in AllDale Minerals III, LP ("AllDale III") which was created for similar investment purposes as AllDale I & II.

12 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

11 unchanged sentences

August 13, 2021

(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.

November 12, 2021 (1)

(1) On October 25, 2021, we declared this quarterly distribution payable on November 12, 2021 to all unitholders of record as of November 5, 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 six months ended June 30, 2021.

No unit repurchases were made during the nine months ended September 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 six months ended June 30, 2021 and 2020:

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

Limited Partner

19 unchanged sentences

Balance at June 30, 2021

Comprehensive income:

Actuarially determined long-term liability adjustments

Total comprehensive income

Settlement of deferred compensation plans

Common unit-based compensation

Distributions on deferred common unit-based compensation

Distributions from consolidated company to noncontrolling interest

Distributions to Partners

Balance at September 30, 2021

Limited Partner

21 unchanged sentences

Balance at June 30, 2020

Comprehensive income:

Actuarially determined long-term liability adjustments

Total comprehensive income

Common unit-based compensation

Distributions from consolidated company to noncontrolling interest

Balance at September 30, 2020

REVENUE FROM CONTRACTS WITH CUSTOMERS

1 unchanged sentence

Coal Operations

Corporate and

(in thousands)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Oil & gas royalties

3 unchanged sentences

Total revenues

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Oil & gas royalties

3 unchanged sentences

Total revenues

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Oil & gas royalties

3 unchanged sentences

Total revenues

Six Months Ended June 30, 2020

Nine Months Ended September 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 June 30, 2021 and disaggregated by segment and contract duration.

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 September 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 and six months ended June 30, 2021 and 2020:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(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 1,525 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 .

The combined total of LTIP, SERP and Directors' Deferred Compensation Plan units of 2,328 and 1,706 for the three and nine months ended September 30, 2021 , respectively, and 661 and 656 for the three and nine months ended September 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

Nine Months Ended

September 30,

(in thousands)

11 unchanged sentences

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 June 30, 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 September 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

Nine Months Ended

September 30,

(in thousands)

2 unchanged sentences

Net periodic benefit cost

(1) Interest cost and net amortization are included in the Other expense line item within our condensed consolidated statements of income.

(1) Interest cost and net amortization are included in the Other expense line item within our condensed consolidated statements of operations.

COMMON UNIT-BASED COMPENSATION PLANS

13 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 six months ended June 30, 2021 is as follows:

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

Number of units

3 unchanged sentences

Non-vested grants at January 1, 2021

Non-vested grants at June 30, 2021

Non-vested grants at September 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.

LTIP expense for grants of restricted units was $ 1.7 million and $ 1.6 million for the three months ended September 30, 2021 and 2020, respectively, and $ 3.8 million and $ 2.5 million for the nine months ended September 30, 2021 and 2020, respectively.

LTIP expense for grants of restricted units for the nine months ended September 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 September 30, 2021 was $ 5.1 million and is included in the partners' capital Limited partners-common unitholders line item in our condensed consolidated balance sheets.

As of September 30, 2021, there was $ 12.6 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 1.8 years.

9 unchanged sentences

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

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

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

Number of units

3 unchanged sentences

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.

Phantom units outstanding as of September 30, 2021

(1) During the nine months ended September 30, 2021, we issued 102,962 ARLP common units purchased on the open market to a participant under the SERP.

Units issued were net of units settled in cash to satisfy tax withholding obligations.

Total SERP and Directors' Deferred Compensation Plan expense was $ 0.1 million for the three months ended September 30, 2021 and 2020, and $ 0.3 million and $ 0.4 million for the nine months ended September 30, 2021, and 2020, respectively.

As of September 30, 2021, the total obligation associated with the SERP and Directors' Deferred Compensation Plan was $ 13.3 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

Nine Months Ended

September 30,

(in thousands)

4 unchanged sentences

Net periodic benefit cost (1)

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

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

During the nine months ended September 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.

3 unchanged sentences

We also have an "all other"

category referred to as Other and Corporate.

category referred to as Other, Corporate and Elimination.

Our two coal operations reportable segments correspond to major coal producing regions in the eastern United States with similar economic characteristics including coal quality, geology, coal marketing opportunities, mining and transportation methods and regulatory issues.

5 unchanged sentences

As a result, we restructured our reportable segments to better reflect this strategic view in how we manage our business and allocate resources.

Prior periods have been recast to include Alliance Resource Properties within our new Coal Royalties reportable segment with offsetting recast adjustments primarily to our coal operations reportable segments and to a lesser extent, our Other and Corporate category.

Our reported eliminations were recast also to reflect intercompany royalty revenues and offsetting intercompany royalty expense resulting from our new Coal Royalties reportable segment.

Eliminations reported in Other, Corporate and Elimination were also recast to reflect intercompany royalty revenues and offsetting intercompany royalty expense resulting from our new Coal Royalties reportable segment.

The Illinois Basin Coal Operations reportable segment includes currently operating mining complexes (a) the Gibson County Coal, LLC ("Gibson") mining complex, which includes the Gibson South mine, (b) the Warrior Coal, LLC ("Warrior") mining complex, (c) the River View Coal, LLC ("River View") mining complex and (d) the Hamilton mining complex.

4 unchanged sentences

The Illinois Basin Coal Operations reportable segment also includes Mid-America Carbonates, LLC ("MAC") and other support services as well as non-operating mining complexes including (a) the Gibson North mine, which ceased production in the fourth quarter of 2019, (b) Webster County Coal, LLC's Dotiki mining complex, (c) White County Coal, LLC's Pattiki mining complex, (d) Hopkins County Coal, LLC's mining complex, and (e) Sebree Mining, LLC's mining complex.

The Appalachia Coal Operations reportable segment includes currently operating mining complexes (a) the Mettiki mining complex, (b) the Tunnel Ridge, LLC mining complex and (c) the MC Mining, LLC ("MC Mining") mining complex.

The Appalachia Coal Operations reportable segment includes currently operating mining complexes (a) the Mettiki mining complex, (b) the Tunnel Ridge, LLC mining complex ("Tunnel Ridge") and (c) the MC Mining, LLC mining complex.

The Mettiki mining complex includes Mettiki Coal (WV), LLC's Mountain View mine and Mettiki Coal, LLC's preparation plant.

3 unchanged sentences

About two thirds of the coal sold by our Coal Operations' mines is leased from our Coal Royalties entities.

Other and Corporate includes marketing and administrative activities, Matrix Design Group, LLC and its subsidiaries ("Matrix Design"), Alliance Design Group, LLC ("Alliance Design") (collectively, Matrix Design and Alliance Design referred to as the "Matrix Group"), Pontiki Coal, LLC's workers' compensation and pneumoconiosis liabilities, Wildcat Insurance, LLC ("Wildcat Insurance"), which assists the ARLP Partnership with its insurance requirements, and AROP Funding and Alliance Finance (both discussed in Note 7 – Long-Term Debt).

Other, Corporate and Elimination includes marketing and administrative activities, Matrix Design Group, LLC and its subsidiaries ("Matrix Design"), Alliance Design Group, LLC ("Alliance Design") (collectively, Matrix Design and Alliance Design referred to as the "Matrix Group"), Pontiki Coal, LLC's workers' compensation and pneumoconiosis liabilities, Wildcat Insurance, LLC ("Wildcat Insurance"), which assists the ARLP Partnership with its insurance requirements, AROP Funding and Alliance Finance (both discussed in Note 7 – Long-Term Debt) and other miscellaneous activities.

The eliminations included in Other, Corporate and Elimination primarily represent the intercompany coal royalty transactions described above between our Coal Royalties reportable segment and our coal operations' mines.

Reportable segment results are presented below.

Coal Operations

Corporate and

(in thousands)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Revenues - Outside

4 unchanged sentences

Capital expenditures

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Revenues - Outside

4 unchanged sentences

Capital expenditures

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Revenues - Outside

4 unchanged sentences

Capital expenditures

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Revenues - Outside

4 unchanged sentences

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.

(2) Revenues included in the Other and Corporate column are primarily attributable to the outside and affiliate revenues at the Matrix Group and coal brokerage activities.

In addition, Other and Corporate includes affiliate revenues from administrative and Wildcat Insurance revenues services.

(1) Revenues included in the Other, Corporate and Elimination column are attributable to intercompany eliminations, which are primarily the coal royalties intercompany eliminations, outside revenues at the Matrix Group and other outside miscellaneous sales and revenue activities.

(2) Segment Adjusted EBITDA Expense includes operating expenses, coal purchases and other income.

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

5 unchanged sentences

Interest expense, net

Income tax (expense) benefit

Income tax expense

Net income (loss) attributable to ARLP

2 unchanged sentences

SUBSEQUENT EVENTS

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

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

On October 13, 2021, ARLP acquired approximately 1,480 oil & gas net royalty acres in the Delaware Basin from Boulders Royalty Corp.

for a purchase price of $ 31.0 million, which was funded with cash on hand.

This acquisition enhances our ownership position in the Permian Basin and furthers our business strategy to grow our Oil & Gas Royalties segment.

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