What changed in this filing

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Item 1. Financial Statements

2022-08-08 compared with 2022-05-09 · 182 added, 75 removed, 524 unchanged (33% of the section changed)

21 unchanged sentences

Equity method investments

Equity securities

Operating lease right-of-use assets

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Three Months Ended

Six Months Ended

SALES AND OPERATING REVENUES:

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Transportation expenses

Outside coal purchases

General and administrative

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INCOME FROM OPERATIONS

Interest expense (net of interest capitalized for the three months ended March 31, 2022 and 2021 of $ 70 and $ 86 , respectively)

Interest expense (net of interest capitalized for the three and six months ended June 30, 2022 and 2021 of $ 171 , $ 105 , $ 241 and $ 191 , respectively)

Interest income

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Three Months Ended

Six Months Ended

OTHER COMPREHENSIVE INCOME:

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COMPREHENSIVE INCOME ATTRIBUTABLE TO ARLP

(1) Amortization of prior service cost and net actuarial gain or loss is included in the computation of net periodic benefit cost (see Notes 13 and 15 for additional details).

(1) Amortization of prior service cost and net actuarial loss is included in the computation of net periodic benefit cost (see Notes 13 and 15 for additional details).

See notes to condensed consolidated financial statements.

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(In thousands)

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

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Proceeds from sale of property, plant and equipment

Contributions to equity method investments

Purchase of equity securities

Distributions received from investments in excess of cumulative earnings

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CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings under securitization facility

Payments under securitization facility

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Cash paid for interest

Cash paid for income taxes

SUPPLEMENTAL NON-CASH ACTIVITY:

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For more information on the Tax Election please see Note 7 – Income Taxes.

Francis Investment

On April 5, 2022, we committed to invest up to $ 50 million in Francis Renewable Energy, LLC ("Francis") through the purchase of preferred equity interests.

Francis currently is active in the installation, management and operation of metered-for-fee, public-access electric vehicle ("EV") charging stations.

Francis also develops and constructs EV charging stations for third-party customers.

Our investment in Francis furthers our business strategy to develop strategic relationships and invest in attractive opportunities in the fast-growing energy infrastructure transition.

For more information on this investment please see Note 8 – Variable Interest Entities.

Infinitum Investment

On April 29, 2022, we purchased $ 32.6 million of Series D Preferred Stock from Infinitum Electric, Inc.

("Infinitum"), a Texas-based startup developer and manufacturer of electric motors featuring printed circuit board stators which have the potential to result in motors that are smaller, lighter, quieter, more efficient and capable of operating at a fraction of the carbon footprint of conventional electric motors.

The preferred stock provides for non-cumulative dividends when and if declared by Infinitum’s board of directors.

Each share is convertible, at any time, at our option, into shares of common stock of Infinitum.

Our investment in Infinitum furthers our business strategy to develop strategic relationships and invest in attractive opportunities in the fast-growing energy infrastructure transition.

For more information on this investment please see Note 9 – Investments.

NGP ETP IV Investment

On June 2, 2022, we committed to purchase $ 25.0 million of limited partner interests in NGP ETP IV, L.P.

("NGP ETP IV"), a private equity fund sponsored by NGP Energy Capital Management, LLC ("NGP").

NGP ETP IV focuses on investments that are part of the global transition toward a lower carbon economy by partnering with top tier management teams and investing growth equity in companies that drive or enable the growth of renewable energy, the electrification of our economy or the efficient use of energy.

For more information on this investment please see Note 8 – Variable Interest Entities.

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, 2022 and December 31, 2021 and the results of our operations, comprehensive income and cash flows for the three months ended March 31, 2022 and 2021.

The accompanying condensed consolidated financial statements include the accounts and operations of the ARLP Partnership and present our financial position as of June 30, 2022 and December 31, 2021, the results of our operations and comprehensive income for the three and six months ended June 30, 2022 and 2021, and cash flows for the six months ended June 30, 2022 and 2021.

All intercompany transactions and accounts have been eliminated.

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

March 31, 2022

June 30, 2022

December 31, 2021

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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 2.80 % as of March 31, 2022.

On March 31, 2022, we had $ 44.1 million of letters of credit outstanding with $ 415.4 million available for borrowing under the Revolving Credit Facility.

The Eurodollar Rate, with applicable margin, under the Revolving Credit Facility was 4.14 % as of June 30, 2022.

On June 30, 2022, we had $ 44.1 million of letters of credit outstanding with $ 415.4 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.

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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 0.88 to 1.0, 12.91 to 1.0 and 0.09 to 1.0, respectively, for the trailing twelve months ended March 31, 2022.

We remained in compliance with the covenants of the Credit Agreement as of March 31, 2022 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 0.74 to 1.0, 15.52 to 1.0 and 0.07 to 1.0, respectively, for the trailing twelve months ended June 30, 2022.

We remained in compliance with the covenants of the Credit Agreement as of June 30, 2022 and anticipate remaining in compliance with the covenants.

Senior Notes.

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Interest is payable semi-annually in arrears on each May 1 and November 1.

The indenture governing the Senior Notes contains customary terms, events of default and covenants relating to, among other

things, the incurrence of debt, the payment of distributions or similar restricted payments, undertaking transactions with affiliates and limitations on asset sales.

The indenture governing the Senior Notes contains customary terms, events of default and covenants relating to, among other things, the incurrence of debt, the payment of distributions or similar restricted payments, undertaking transactions with affiliates and limitations on asset sales.

The issuers of the Senior Notes may redeem all or a part of the notes at any time at redemption prices set forth in the indenture governing the Senior Notes.

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After the sale, Alliance Coal, as servicer of the assets, collects the receivables on behalf of AROP Funding.

The Securitization Facility bears interest based on a Eurodollar Rate.

The Securitization Facility bears interest based on a short-term bank yield index.

On June 30, 2022, we had $ 9.2 million of letters of credit outstanding with $ 50.8 million available for borrowing under the Securitization Facility.

The agreement governing the Securitization Facility contains customary terms and conditions, including limitations with regards to certain customer credit ratings.

In January 2022, we extended the term of the Securitization Facility to January 2023.

The Securitization Facility was previously scheduled to mature in January 2022.

On March 31, 2022, we had no outstanding balance under the Securitization Facility.

The Securitization Facility is scheduled to mature in January 2023.

On June 30, 2022, we had no outstanding balance under the Securitization Facility.

May 2019 Equipment Financing .

On May 17, 2019, the Intermediate Partnership entered into an equipment financing arrangement accounted for as debt, wherein the Intermediate Partnership received $ 10.0 million in exchange for conveying its interest in certain equipment owned indirectly by the Intermediate Partnership and entering into a master lease agreement for that equipment (the "May 2019 Equipment Financing").

The May 2019 Equipment Financing contains customary terms and events of default and provides for thirty-six monthly payments with an implicit interest rate of 6.25 % .

The May 2019 Equipment Financing contained customary terms and events of default and provided for thirty-six monthly payments with an implicit interest rate of 6.25 % .

The May 2019 Equipment Financing matured on May 1, 2022 and the equipment reverted to the Intermediate Partnership.

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On June 5, 2020, the Intermediate Partnership entered into an equipment financing arrangement accounted for as debt, wherein the Intermediate Partnership received $ 14.7 million in exchange for conveying its interest in certain equipment owned indirectly by the Intermediate Partnership and entering into a master lease agreement for that equipment (the "June 2020 Equipment Financing").

The June 2020 Equipment Financing contains customary terms and events of default and provides for forty-eight monthly payments with an implicit interest rate of 6.1 % , maturing on June 5, 2024.

The June 2020 Equipment Financing contains

customary terms and events of default and provides for forty-eight monthly payments with an implicit interest rate of 6.1 % , maturing on June 5, 2024.

Upon maturity, the equipment will revert to the Intermediate Partnership.

Components of income tax expense (benefit) are as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Income tax expense (benefit)

Alliance Minerals' Tax Election resulted in the recognition of an initial deferred tax liability of $ 37.3 million and a corresponding increase to income tax expense for the three months ended March 31, 2022.

This increase in income tax expense reduced net income by $ 37.3 million, or approximately $ 0.29 per basic and diluted limited partner unit, for the three months ended March 31, 2022.

Alliance Minerals' Tax Election resulted in the recognition of an initial deferred tax liability of $ 37.3 million and a corresponding increase to income tax expense for the six months ended June 30, 2022.

This increase in income tax expense reduced net income by $ 37.3 million, or approximately $ 0.29 per basic and diluted limited partner unit, for the six months ended June 30, 2022.

Recognition of the initial deferred tax liability and expense is primarily the result of the $ 177.0 million non-cash acquisition gain recognized in 2019 related to the acquisition of the remaining interests in AllDale Minerals LP ("AllDale I") and AllDale Minerals II, LP ("AllDale II", and collectively with AllDale I, "AllDale I & II") (the “Acquisition Gain”).

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federal statutory tax rate to income taxes at our effective tax rate are as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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Income tax expense (benefit)

The effective income tax rate for our income tax expense for the three months ended March 31, 2022 is greater than the federal statutory rate, primarily due to the effect of the Tax Election previously discussed, partially offset by the portion of income not subject to income taxes.

The effective income tax rate for our income tax benefit for the three months ended March 31, 2021 is less than the federal statutory rate, primarily due to the portion of income not subject to income taxes.

The effective income tax rate for our income tax expense for the three months ended June 30, 2022 is less than the federal statutory rate, primarily due to the portion of income not subject to income taxes, partially offset by the effect of the Tax Election previously discussed.

The effective income tax rate for our income tax expense for the six months ended June 30, 2022 is greater than the federal statutory rate, primarily due to the effect of the Tax Election, partially offset by the portion of income not subject to income taxes.

The effective income tax rate for our income tax expense (benefit) for the three and six months ended June 30, 2021 is less than the federal statutory rate, primarily due to the portion of income not subject to income taxes.

Significant components of deferred tax liabilities and deferred tax assets are as follows:

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Overall net deferred tax liabilities

The change in deferred tax liabilities for property, plant and equipment is primarily as a result of the Acquisition Gain discussed above.

The change in deferred tax liabilities for property, plant and equipment is primarily as a result of the Alliance Minerals’ Tax Election and associated impact of the Acquisition Gain discussed above.

Federal loss carryovers and credits are primarily due to net operating losses and research and development credits associated with the operations of other subsidiaries that are taxable for federal income tax purposes.

The valuation allowance as of March 31, 2022 and 2021 serves to reduce the available deferred tax assets to amounts that will, more likely than not, be realized.

The valuation allowance as of June 30, 2022 and 2021 serves to reduce the available deferred tax assets to amounts that will, more likely than not, be realized.

We considered all available positive and negative evidence, which incorporates available tax planning strategies and our estimate of future reversals of existing temporary differences, and have determined that a portion of our deferred tax assets relating to state losses and credits may not be realized.

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provision for the general partner.

Since AllDale III is structured as a limited partnership with the limited partners 1) not having the ability to remove the general partner and 2) not participating significantly in the operational decisions, we concluded that AllDale III is a VIE.

Since AllDale III is structured as a limited partnership with the limited partners (i) not having the ability to remove the general partner and (ii) not participating significantly in the operational decisions, we concluded that AllDale III is a VIE.

We are not the primary beneficiary of AllDale III as we do not have the power to direct the activities that most significantly impact AllDale III's economic performance.

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We record equity income or loss based on AllDale III's distribution structure.

See Note 9 – Investment for more information.

See Note 9 – Investments for more information.

On April 5, 2022, we committed to invest up to $ 50 million in Francis through the purchase of preferred equity interests.

We funded the first $ 20 million on April 5, 2022, in the form of a convertible note with a maturity date of April 1, 2023.

Our convertible note represents a 15.4 % ownership interest in Francis.

The note converts into preferred equity interests in Francis at maturity, or any time prior at our option.

We have determined the note more closely represents equity as opposed to debt.

Therefore, we will account for the convertible note as an equity contribution even though we will not participate in Francis’ earnings or losses and will not be eligible to receive distributions until the note converts.

We have options to acquire the remaining preferred equity interests as part of our investment.

We have concluded that Francis is a VIE as the management structure is similar to a limited partnership with the non-managing members (i) not having the ability to remove the managing member and (ii) not participating significantly in the operational decisions.

We are not the primary beneficiary of Francis as we do not have the power to direct the activities that most significantly impact Francis's economic performance.

We account for our ownership interest in the income or loss of Francis as an equity method investment.

We record equity income or loss based on Francis’ distribution structure.

See Note 9 – Investments for more information.

On June 2, 2022, we committed to purchase $ 25.0 million of limited partner interests in NGP ETP IV, a private equity fund sponsored by NGP and focused on investments that are part of the global transition toward a lower carbon economy.

We funded $ 0.1 million on June 21, 2022.

Our final ownership percentage in NGP ETP IV is not yet known.

We have concluded that NGP ETP IV is a VIE as it is structured as a limited partnership with limited partners (i) not having the ability to remove the general partner and (ii) not participating significantly in the operational decisions.

We are not the primary beneficiary of NGP ETP IV as we do not have the power to direct the activities that most significantly impact NGP ETP IV's economic performance.

We account for our ownership interest in the income or loss of NGP ETP IV as an equity method investment.

See Note 9 – Investments for more information.

As discussed in Note 8 – Variable Interest Entities, we account for our ownership interest in the income or loss of AllDale III as an equity method investment.

We record equity income or loss based on AllDale III's distribution structure.

The changes in our equity method investment in AllDale III for each of the periods presented were as follows:

Three Months Ended

Six Months Ended

(in thousands)

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Ending balance

As discussed in Note 8 – Variable Interest Entities, we accounted for our ownership interest in the income or loss of Francis as an equity method investment.

The changes in our equity method investment in Francis for three months ended June 30, 2022 were as follows:

Three Months Ended

(in thousands)

Beginning balance

Contributions

Ending balance

As discussed in Note 8 – Variable Interest Entities, we account for our ownership interest in the income or loss of NGP ETP IV as an equity method investment.

The changes in our equity method investment in NGP ETP IV for three months ended June 30, 2022 were as follows:

Three Months Ended

(in thousands)

Beginning balance

Contributions

Ending balance

On April 29, 2022, we purchased $ 32.6 million of Series D Preferred Stock from Infinitum, a Texas-based startup developer and manufacturer of electric motors featuring printed circuit board stators.

The preferred stock provides for non-cumulative dividends when and if declared by Infinitum’s board of directors.

Each share is convertible, at any time, at our option, into shares of common stock of Infinitum.

We account for our ownership interest in Infinitum as an equity investment without a readily determinable fair value.

It is not practicable to estimate the fair value of our investment in Infinitum because of the lack of a quoted market price for our ownership interests.

Therefore, we use a measurement alternative other than fair value to account for our investment.

There were no changes in our investment in Infinitum for three months ended June 30, 2022.

During the period we have not observed any price changes that have occurred to identical or similar securities sold by Infinitum that would indicate an adjustment to the fair value of our investment is warranted.

PARTNERS' CAPITAL

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February 14, 2022

May 13, 2022 (1)

(1) On April 26, 2022, we declared this quarterly distribution payable on May 13, 2022 to all unitholders of record as of May 6, 2022.

August 12, 2022 (1)

(1) On July 26, 2022, we declared this quarterly distribution payable on August 12, 2022 to all unitholders of record as of August 5, 2022.

Unit Repurchase Program

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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, 2022.

No unit repurchases were made during the six months ended June 30, 2022.

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.

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Change in Partners' Capital

The following tables present the quarterly change in Partners' Capital for the three months ended March 31, 2022 and 2021:

The following tables present the quarterly change in Partners' Capital for the six months ended June 30, 2022 and 2021:

Limited Partner

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Balance at March 31, 2022

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, 2022

Limited Partner

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Balance at March 31, 2021

Comprehensive income:

Actuarially determined long-term liability adjustments

Total comprehensive loss

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

REVENUE FROM CONTRACTS WITH CUSTOMERS

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(in thousands)

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Oil & gas royalties

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Total revenues

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Oil & gas royalties

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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, 2022 and disaggregated by segment and contract duration.

Six Months Ended June 30, 2022

Oil & gas royalties

Coal royalties

Transportation revenues

Other revenues

Total revenues

Six Months Ended June 30, 2021

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, 2022 and disaggregated by segment and contract duration.

(in thousands)

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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 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, 2022 and 2021:

Three Months Ended

Six Months Ended

(in thousands, except per unit data)

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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 3,139 and 1,237 for the three months ended March 31, 2022 and 2021 , respectively, were considered anti-dilutive under the treasury stock method .

The combined total of LTIP, SERP and Directors' Deferred Compensation Plan units of 3,529 and 3,289 for the three and six months ended June 30, 2022, respectively, and 1,525 and 1,397 for the three and six months ended June 30, 2021 , respectively, were considered anti-dilutive under the treasury stock method .

WORKERS' COMPENSATION AND PNEUMOCONIOSIS

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Three Months Ended

Six Months Ended

(in thousands)

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Interest accretion

Valuation 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 2022 is due to an increase in the discount rate from 2.41 % on December 31, 2021 to 4.22 % on June 30, 202 2 .

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 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.

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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, 2022 are $ 5.7 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, 2022 are $ 5.7 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.

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Three Months Ended

Six Months Ended

(in thousands)

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As provided under the distribution equivalent rights ("DERs") provisions of the LTIP and the terms of the LTIP restricted unit awards, all non-vested restricted units include contingent rights to receive quarterly distributions in cash or, at the discretion of the Compensation Committee, phantom units in lieu of cash credited to a bookkeeping account with value equal to the cash distributions we make to unitholders during the vesting period.

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, 2022 is as follows:

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 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, 2022 is as follows:

Number of units

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Non-vested grants at January 1, 2022

Non-vested grants at March 31, 2022

Non-vested grants at June 30, 2022

(1) The restricted units granted during 2022 have minimum-value guarantees of either $ 9.62 or $ 6.41 per unit, regardless of whether or not the awards vest.

LTIP expense for grants of restricted units was $ 2.3 million and $ 0.7 million for the three months ended March 31, 2022 and 2021, respectively.

The total obligation associated with LTIP grants of restricted units as of March 31, 2022 was $ 9.0 million and is included in the partners' capital Limited partners-common unitholders line item in our condensed consolidated balance sheets.

As of March 31, 2022, there was $ 17.6 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 $ 2.1 million and $ 1.4 million for the three months ended June 30, 2022 and 2021, respectively, and $ 4.4 million and $ 2.1 million for the six months ended June 30, 2022 and 2021, respectively.

The total obligation associated with LTIP grants of restricted units as of June 30, 2022 was $ 11.0 million and is included in the partners' capital Limited partners-common unitholders line item in our condensed consolidated balance sheets.

As of June 30, 2022, there was $ 14.5 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 1.3 years.

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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 three months ended March 31, 2022 is as follows:

A summary of SERP and Directors' Deferred Compensation Plan activity as of and for the six months ended June 30, 2022 is as follows:

Number of units

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Phantom units outstanding as of January 1, 2022

Phantom units outstanding as of March 31, 2022

Total SERP and Directors' Deferred Compensation Plan expense was $ 0.2 million and $ 0.04 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the total obligation associated with the SERP and Directors' Deferred Compensation Plan was $ 13.8 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 June 30, 2022

Total SERP and Directors' Deferred Compensation Plan expense was $ 0.3 million and $ 0.1 million for the three months ended June 30, 2022 and 2021, respectively, and $ 0.6 million and $ 0.2 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, the total obligation associated with the SERP and Directors' Deferred Compensation Plan was $ 14.0 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

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Three Months Ended

Six Months Ended

(in thousands)

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Our Coal Royalties reportable segment includes coal mineral reserves and resources owned or leased by Alliance Resource Properties, which are either (a) leased to our mining complexes or (b) near our coal mining operations but not yet leased.

The Illinois Basin Coal Operations reportable segment includes 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 County Coal, LLC ("Hamilton") mining complex.

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

The segment also includes our Mt.

Vernon Transfer Terminal, LLC ("Mt.

Vernon") coal-loading terminal in Indiana which operates on the Ohio River, Mid-America Carbonates, LLC ("MAC") and other support services, and our non-operating Illinois Basin mining complexes.

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

Vernon Transfer Terminal, LLC coal-loading terminal in Indiana which operates on the Ohio River, Mid-America Carbonates, LLC and other support services, and our non-operating Illinois Basin mining complexes.

The Appalachia Coal Operations reportable segment includes operating mining complexes (a) the Mettiki mining complex, (b) the Tunnel Ridge, LLC mining complex 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.

The Oil & Gas Royalties reportable segment includes oil & gas mineral interests held by AR Midland, LP ("AR Midland") and AllDale I & II and includes Alliance Minerals' equity interests in both AllDale III (Note 9 – Investment) and Cavalier Minerals.

The Coal Royalties reportable segment includes coal mineral reserves and resources owned or leased by Alliance Resource Properties that are (a) leased to certain of our mining complexes in both the Illinois Basin Coal Operations and Appalachia Coal Operations reportable segments or (b) located near our operations and external mining operations.

Appalachia Coal Operations reportable segments or (b) located near our operations and external mining operations.

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

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 6 – Long-Term Debt) and other miscellaneous activities.

Other, Corporate and Elimination includes marketing and administrative activities, Matrix Design Group, LLC, its subsidiaries, and Alliance Design Group, LLC (collectively referred to as the "Matrix Group"), our investments in Francis, Infinitum and NGP ETP IV (see Note 9 – Investments), Wildcat Insurance, LLC, which assists the ARLP Partnership with its insurance requirements, AROP Funding and Alliance Finance (both discussed in Note 6 – Long-Term Debt), Pontiki Coal, LLC's workers' compensation and pneumoconiosis liabilities 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.

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(in thousands)

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Revenues - Outside

4 unchanged sentences

Capital expenditures

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Revenues - Outside

4 unchanged sentences

Capital expenditures

Six Months Ended June 30, 2022

Revenues - Outside

Revenues - Intercompany

Total revenues (1)

Segment Adjusted EBITDA Expense (2)

Segment Adjusted EBITDA (3)

Capital expenditures

Six Months Ended June 30, 2021

Revenues - Outside

Revenues - Intercompany

Total revenues (1)

Segment Adjusted EBITDA Expense (2)

Segment Adjusted EBITDA (3)

Capital expenditures

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

3 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

Segment Adjusted EBITDA Expense

Outside coal purchases

Other income (expense)

4 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

6 unchanged sentences

Noncontrolling interest

SUBSEQUENT EVENTS

On April 5, 2022, we committed to invest up to $ 50 million in Francis Renewable Energy, LLC ("Francis") through the purchase of preferred equity interests, subject to adjustment in certain circumstances, which when completed will make us the second largest shareholder in Francis.

Francis currently is active in the installation, management and operation of metered-for-fee, public-access electric vehicle (“EV”) charging stations.

Founded in 2015 and based in Tulsa, Oklahoma, Francis is a leading operator of EV chargers in the state of Oklahoma with plans to service states across the Midwest and Eastern U.S.

Francis also develops and constructs EV charging stations for third-party customers.

Francis’ goal is to provide EV drivers convenient, affordable, easy to use public access to charging stations.

Our investment in Francis furthers our business strategy to develop strategic relationships to invest in attractive opportunities in the fast-growing energy infrastructure transition.

We funded our first commitment payment of $ 20 million on April 5, 2022, in the form of a convertible note with a maturity date of April 1, 2023.

The note converts into preferred equity interests in Francis at maturity, or any time prior at our option.

We have determined the note more closely represents equity as opposed to debt.

Therefore, we will account for the convertible note as an equity method investment although we will not participate in Francis’ earnings or losses and will not be eligible to receive distributions until the note converts.

We have options exercisable over the next 12 months to acquire the remaining preferred equity interests as part of our investment.

On April 29, 2022, we purchased $ 32.6 million of Series D Preferred Stock from Infinitum Electric, Inc.

(“Infinitum”), a Texas-based startup developer and manufacturer of electric motors featuring printed circuit board stators which have the potential to result in motors that are smaller, lighter, quieter, more efficient and capable of operating at a

fraction of the carbon footprint of conventional electric motors.

The preferred stock provides for non-cumulative dividends when and if declared by Infinitum’s board of directors.

Each share is convertible, at any time, at our option, into shares of common stock of Infinitum.

We plan to account for our ownership interest in Infinitum as an equity investment without a readily determinable fair value, wherein we use a measurement alternative other than fair value, because it is not practicable to estimate the fair value due to the lack of a quoted market price for our ownership interests.

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