What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-08 compared with 2023-05-09 · 181 added, 52 removed, 226 unchanged (51% of the section changed)

28 unchanged sentences

We currently own oil & gas mineral interests in approximately 65,000 net royalty acres in premier oil & gas producing regions of the United States, primarily in the Permian (Delaware and Midland), Anadarko (SCOOP/STACK), and Williston (Bakken) basins providing us with diversified exposure to industry-leading operators consistent with our general strategy to grow our oil & gas mineral interest business.

We have invested in energy and infrastructure opportunities including our investments in Francis, Infinitum, and NGP ETP IV, which are in the businesses of, respectively, electric vehicle charging stations, electric motor manufacturing, and private equity investments in renewable energy, the electrification of our economy or the efficient use of energy.

We have invested in energy and infrastructure opportunities including our investments in Francis Renewable Energy, LLC ("Francis"), Infinitum Electric, Inc.

("Infinitum"), and NGP ETP IV, L.P.

("NGP ETP IV"), which are in the businesses of, respectively, electric vehicle charging stations, electric motor manufacturing, and private equity investments in renewable energy, the electrification of our economy or the efficient use of energy.

On January 27, 2023, we entered into a one-year collaborative agreement with a third party effective January 1, 2023, committing up to $35.0 million for the acquisition of oil & gas mineral interests in the Midland and Delaware basins (the "Acquisition Agreement").

12 unchanged sentences

The segment also includes our Mt.

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

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

● Appalachia Coal Operations reportable segment includes (a) the Mettiki mining complex, (b) the Tunnel Ridge mining complex and (c) the MC Mining mining complex.

5 unchanged sentences

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 its subsidiaries and Alliance Design Group, LLC (collectively referred to as the "Matrix Group"), our investments in Francis, Infinitum, and NGP ETP IV, Wildcat Insurance, LLC, which assists the ARLP Partnership with its insurance requirements, AROP Funding, LLC and Alliance Resource Finance Corporation 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, Wildcat Insurance, LLC, which assists the ARLP Partnership with its insurance requirements, AROP Funding, LLC ("AROP Funding") and Alliance Resource Finance Corporation ("Alliance Finance") 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.

3 unchanged sentences

of this Quarterly Report on Form 10-Q for more information on our investments in Francis, Infinitum and NGP ETP IV as well as AROP Funding and Alliance Finance.

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

Three Months Ended March 31,

Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022

Three Months Ended June 30,

(in thousands)

13 unchanged sentences

(2) For a definition of Segment Adjusted EBITDA Expense and related reconciliation to comparable generally accepted accounting principles ("GAAP") financial measures, please see below under "—Reconciliation of GAAP 'Operating Expenses' to non-GAAP 'Segment Adjusted EBITDA Expense.'"

(3) During the three months ended March 31, 2023 ("2023 Quarter"), we redefined Coal - Segment Adjusted EBITDA Expense to reflect the activity of Alliance Coal, which is the holding company for our coal mining operations.

We have retrospectively adjusted Coal - Segment Adjusted EBITDA Expense in the three months ended March 31, 2022 ("2022 Quarter") to be on the same basis.

(3) Beginning in 2023, we redefined Coal - Segment Adjusted EBITDA Expense to reflect the activity of Alliance Coal, which is the holding company for our coal mining operations.

We have retrospectively adjusted Coal - Segment Adjusted EBITDA Expense in prior periods to be on the same basis.

(4) Average sales price per BOE is defined as oil & gas royalty revenues excluding lease bonus revenue divided by total BOE sold.

Total Revenues .

Total revenues for the 2023 Quarter increased 43.0% to $662.9 million compared to $463.4 million for the 2022 Quarter as a result of significantly higher coal sales.

Coal sales increased 49.0% to $578.8 million in the 2023 Quarter from $388.4 million in the 2022 Quarter due to $175.8 million in higher price realizations in both domestic and export markets, which reflects a 43.6% increase to $68.34 per ton sold compared to $47.58 per ton sold in the 2022 Quarter, and $14.6 million in increased coal sales volumes, reflecting a 3.8% increase compared to the 2022 Quarter.

Total revenues for the three months ended June 30, 2023 ("2023 Quarter") increased 3.5% to $641.8 million compared to $619.9 million for the three months ended June 30, 2022 ("2022 Quarter") as a result of higher coal sales price per ton, partially offset primarily by lower average oil & gas sales price per BOE.

Total operating expenses .

Total operating expenses increased to $455.6 million in the 2023 Quarter, compared to $374.2 million in the 2022 Quarter, due primarily to increased coal sales volumes and inflationary pressures on certain expense items.

Total operating expenses increased to $457.9 million in the 2023 Quarter, compared to $442.6 million in the 2022 Quarter, due primarily to the sale of higher cost purchased coal and increased per ton costs on certain expense items discussed in more detail below.

Net income attributable to ARLP .

Increased revenues and lower income tax expense, partially offset by higher total operating expenses, led net income attributable to ARLP for the 2023 Quarter to $191.2 million, or $1.45 per basic and diluted limited partner unit, compared to $38.1 million, or $0.28 per basic and diluted limited partner unit, for the 2022 Quarter.

Increased revenues, partially offset by higher total operating expenses, led to net income attributable to ARLP for the 2023 Quarter of $169.8 million, or $1.30 per basic and diluted limited partner unit, compared to $163.5 million, or $1.23 per basic and diluted limited partner unit, for the 2022 Quarter.

Coal sales increased $28.5 million or 5.4% to $560.3 million for the 2023 Quarter from $531.8 million for the 2022 Quarter.

The increase was attributable to a price variance of $30.2 million due to higher average coal sales prices, partially offset by a volume variance of $1.7 million resulting from reduced tons sold.

Improved price realizations in domestic markets during the 2023 Quarter drove coal sales prices higher by 5.7% in the 2023 Quarter to $62.93 per ton sold, compared to $59.53 per ton sold during the 2022 Quarter.

Coal - Segment Adjusted EBITDA Expense .

Segment Adjusted EBITDA Expense for our coal operations increased 28.3% to $335.9 million, as a result of higher coal sales volumes and ongoing inflationary cost pressures.

On a per ton basis, Segment Adjusted EBITDA Expense for our coal operations increased 23.7% to $39.66 per ton sold in the 2023 Quarter compared to $32.07 per ton in the 2022 Quarter, primarily due to certain cost increases, which are discussed below by category:

Segment Adjusted EBITDA Expense for our coal operations increased 7.4% to $337.0 million, as a result of higher per ton costs.

Segment Adjusted EBITDA Expense per ton sold for our coal operations increased 7.8% to $37.85 per ton sold in the 2023 Quarter compared to $35.12 per ton in the 2022 Quarter, primarily due to certain cost increases, which are discussed below by category:

● Labor and benefit expenses per ton produced, excluding workers' compensation, increased 7.5% to $11.23 per ton in the 2023 Quarter from $10.45 per ton in the 2022 Quarter.

The increase of $0.78 per ton was primarily due to higher incentive benefits and direct labor costs at several mines.

● Material and supplies expenses per ton produced increased 12.6% to $13.99 per ton in the 2023 Quarter from $12.42 per ton in the 2022 Quarter.

The increase of $1.57 per ton produced primarily reflects increases of $0.48 per ton for ventilation related expenses, $0.33 per ton for power and fuel, $0.25 per ton for various preparation plant expenses, $0.24 per ton in longwall subsidence expense and $0.20 per ton for safety related materials and supplies, partially offset by a decrease of $0.29 per ton for roof support.

● Workers' compensation expenses per ton produced increased to $0.52 per ton in the 2023 Quarter from $(0.15) per ton in the 2022 Quarter.

The increase of $0.67 per ton produced primarily reflects a favorable mid-year workers' compensation accrual adjustment in the 2022 Quarter due to an increase in the discount rate.

● Maintenance expenses per ton produced increased 12.2% to $4.05 per ton in the 2023 Quarter from $3.61 per ton in the 2022 Quarter.

The increase of $0.44 per ton produced was primarily as a result of inflationary cost pressures.

● Production taxes and royalty expenses per ton incurred as a percentage of coal sales prices and volumes increased $1.80 per produced ton sold in the 2023 Quarter compared to the 2022 Quarter primarily as a result of higher price realizations, increased excise taxes per ton resulting from a reduced mix of export shipments and higher federal black lung excise tax rates, which had temporarily decreased from January 1, 2022 to September 30, 2022, partially offset by a favorable mix of tons sold mined in states without severance taxes.

● Production taxes and royalty expenses per ton incurred as a percentage of coal sales prices increased $0.27 per produced ton sold in the 2023 Quarter compared to the 2022 Quarter primarily as a result of higher price realizations, increased excise taxes per ton resulting from a reduced mix of export shipments and higher federal black lung excise tax as a result of the tax rate increasing effective October 1, 2022, partially offset by a favorable mix of tons sold mined in states without severance taxes.

● Outside coal purchases increased $4.1 million in the 2023 Quarter as a result of increased sales from purchased coal, which generally costs more on a per ton basis than our produced coal.

Segment Adjusted EBITDA Expense increases per ton were partially offset by the following decreases:

● Material and supplies expenses per ton produced decreased 6.1% to $12.84 per ton in the 2023 Quarter from $13.68 per ton in the 2022 Quarter.

The decrease of $0.84 per ton produced primarily reflects decreases of $0.69

per ton for roof support, $0.16 per ton for outside expenses used in the mining process and $0.13 per ton in longwall subsidence expense, partially offset by an increase of $0.17 per ton for various preparation plant expenses.

● A $6.5 million non-cash contingent accrual in the 2022 Quarter related to our purchase of the Hamilton mine based upon a projection for higher coal sale price realizations in the future.

Oil & gas royalties.

Oil & gas royalty revenues decreased to $33.1 million in the 2023 Quarter compared to $39.3 million for the 2022 Quarter.

The decrease of $6.2 million was primarily due to lower average sales price per BOE, which decreased by 40.2%, partially offset by higher BOE volumes.

Other revenues .

3 unchanged sentences

The increase of $4.5 million was primarily due to increased sales of mining technology products by our Matrix Design subsidiary.

Income tax expense.

Income tax expense decreased to $4.2 million for the 2023 Quarter compared to $42.7 million for the 2022 Quarter as a result of Alliance Minerals' election during the 2022 Quarter to be treated as a taxable

entity for federal and state income tax purposes.

We recognized a one-time non-cash income tax charge of $37.3 million during the 2022 Quarter related to this election.

Transportation revenues and expenses .

Transportation revenues and expenses were $30.5 million and $35.4 million for the 2023 and 2022 Quarters, respectively.

The decrease of $4.9 million was primarily attributable to decreased average third-party transportation rates in the 2022 Quarter and reduced coal shipments for which we arrange third-party transportation.

Transportation revenues are recognized when title to the coal passes to the customer and recognized in an amount equal to the corresponding transportation expenses.

Segment Adjusted EBITDA.

Our 2023 Quarter Segment Adjusted EBITDA increased $118.7 million to $291.9 million from the 2022 Quarter Segment Adjusted EBITDA of $173.2 million.

Our 2023 Quarter Segment Adjusted EBITDA of $269.4 million remained consistent with the 2022 Quarter Segment Adjusted EBITDA of $269.3 million.

Three Months Ended

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of this Quarterly Report on Form 10-Q.

(2) Percentage change not meaningful.

(2) Other, Corporate and Elimination includes the elimination of intercompany coal royalty revenues and expenses between our Coal Royalties Segment and our Coal Operations Segments in addition to the expenses for the other miscellaneous activities included in this category.

(4) For definitions of Segment Adjusted EBITDA and Segment Adjusted EBITDA Expense and related reconciliations to their respective comparable GAAP financial measures, please see below under "—Reconciliation of GAAP 'net income' to non-GAAP 'Segment Adjusted EBITDA' and reconciliation of GAAP 'Operating Expenses' to non-GAAP 'Segment Adjusted EBITDA Expense.'"

income' to non-GAAP 'Segment Adjusted EBITDA' and reconciliation of GAAP 'Operating Expenses' to non-GAAP 'Segment Adjusted EBITDA Expense.'"

(4) Barrels of oil equivalent ("BOE") is calculated on a 6:1 basis (6,000 cubic feet of natural gas to one barrel).

3 unchanged sentences

The increase in coal sales reflects higher coal sales price realizations and increased sales volumes.

Coal sales price per ton sold in the 2023 Quarter increased by 26.1% compared to the 2022 Quarter reflecting improved price realizations in both the domestic and export markets.

Tons sold were higher by 5.2% compared to the 2022 Quarter as a result of increased sales volumes from the Gibson South and River View mines.

Coal sales price per ton sold in the 2023 Quarter increased by 9.8% compared to the 2022 Quarter reflecting improved domestic price realizations.

Tons sold increased by 4.0% compared to the 2022 Quarter due primarily to increased volumes from the Hamilton and Warrior mines.

Segment Adjusted EBITDA Expense increased 10.3% to $214.7 million in the 2023 Quarter from $194.7 million in the 2022 Quarter primarily as a result of increased sales volumes and higher expenses per ton.

Segment Adjusted EBITDA Expense per ton increased $3.26 per ton sold to $33.45 from $30.19 per ton sold in the 2022 Quarter primarily as a result of inflationary pressures on certain expense items, most notably labor-related expenses, maintenance costs and increased sales-related expenses due to higher price realizations.

Appalachia Coal Operations – Segment Adjusted EBITDA increased 128.1% to $116.6 million for the 2023 Quarter from $51.1 million in the 2022 Quarter.

The increase of $65.5 million was primarily attributable to higher coal sales, which increased 79.9% to $241.9 million in the 2023 Quarter from $134.5 million in the 2022 Quarter, due to substantially higher coal sales prices.

Coal sales prices increased by 80.0% compared to the 2022 Quarter primarily due to improved price realizations in both the domestic and export markets.

Segment Adjusted EBITDA Expense increased 50.3% to $125.8 million in the 2023 Quarter from $83.7 million in the 2022 Quarter due to higher per ton expenses.

Segment Adjusted EBITDA Expense per ton increased $18.48 per ton sold to $55.20 compared to $36.72 per ton sold in the 2022 Quarter, as a result of increased longwall move days at the Tunnel Ridge mine, reduced recoveries at the MC Mining and Mettiki operations and inflationary pressures on certain expense items, most notably labor-related expenses, materials and maintenance costs and increased sales-related expenses due to higher price realizations.

Oil & Gas Royalties – Segment Adjusted EBITDA decreased slightly to $30.0 million in the 2023 Quarter compared to $30.8 million in the 2022 Quarter primarily due to lower average sales price per BOE, partially offset by higher BOE sold.

Segment Adjusted EBITDA Expense per ton increased by 6.0% compared to the 2022 Quarter resulting from higher labor-related expenses and maintenance costs as well as increased sales-related expenses due to higher price realizations.

Appalachia Coal Operations – Segment Adjusted EBITDA decreased 11.9% to $109.6 million for the 2023 Quarter from $124.4 million in the 2022 Quarter.

The decrease of $14.8 million was primarily attributable to lower coal sales, which decreased 5.3% to $228.5 million in the 2023 Quarter from $241.4 million in the 2022 Quarter, and higher operating expenses.

Coal sales volumes decreased by 8.5% compared to the 2022 Quarter as a result of reduced export sales across the region and lower production from our MC Mining operation.

Coal sales prices increased by 3.5% compared to the 2022 Quarter primarily due to improved price realizations in domestic markets.

Segment Adjusted EBITDA Expense increased slightly to $119.3 million in the 2023 Quarter from $117.4 million in the 2022 Quarter due to higher per ton expenses, partially offset by reduced sales volumes.

Segment Adjusted EBITDA Expense per ton increased $4.20 per ton sold to $42.04 compared to $37.84 per ton sold in the 2022 Quarter, as a result of increased labor-related expenses, purchased coal, and higher inventory charges, partially offset by increased recoveries and lower selling expenses due to a greater mix of coal sales from operations in states with lower severance taxes per ton during the 2023 Quarter.

Oil & Gas Royalties – Segment Adjusted EBITDA decreased 22.8% to $29.1 million in the 2023 Quarter compared to $37.6 million in the 2022 Quarter primarily due to lower average sales price per BOE, partially offset by higher BOE sold.

Higher BOE volumes during the 2023 Quarter resulted from increased drilling and completion activities on our properties and additional volumes from oil & gas mineral interest acquisitions.

Coal Royalties – Segment Adjusted EBITDA decreased 2.2% to $10.1 million for the 2023 Quarter compared to $10.3 million for the 2022 Quarter as a result of fewer royalty tons sold and increased selling expenses, partially offset by higher average royalty rates per ton received from our mining subsidiaries.

Coal Royalties – Segment Adjusted EBITDA increased 20.2% to $11.0 million for the 2023 Quarter compared to $9.1 million for the 2022 Quarter as a result of higher average royalty rates per ton received from our mining subsidiaries, partially offset by fewer royalty tons sold.

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022

Six Months Ended June 30,

(in thousands)

(per ton / per BOE sold)

Coal - Tons sold

Coal - Tons produced

Coal - Coal sales

Coal - Segment Adjusted EBITDA Expense (2) (3)

Oil & Gas Royalties - BOE sold

Oil & Gas Royalties - Royalties (4)

Coal Royalties - Tons sold

Coal Royalties - Intercompany royalties

(1) Recast for the JC Resources Acquisition.

For more information, please read "Item 1.

Financial Statements (Unaudited)—Note 1 – Organization and Presentation"

of this Quarterly Report on Form 10-Q.

(3) Beginning in 2023, we redefined Coal - Segment Adjusted EBITDA Expense to reflect the activity of Alliance Coal, which is the holding company for our coal mining operations.

We have retrospectively adjusted Coal - Segment Adjusted EBITDA Expense in prior periods to be on the same basis.

(4) Average sales price per BOE is defined as oil & gas royalty revenues excluding lease bonus revenue divided by total BOE sold.

Total Revenues .

Total revenues for the six months ended June 30, 2023 ("2023 Period") increased 20.4% to $1.30 billion compared to $1.08 billion for the six months ended June 30, 2022 ("2022 Period") as a result of significantly higher coal sales.

Coal sales increased 23.8% to $1.14 billion in the 2023 Period from $920.2 million in the 2022 Period due to $204.0 million in higher price realizations in domestic markets, which reflects a 21.8% increase to $65.57 per ton sold compared to $53.83 per ton sold in the 2022 Period, and $15.0 million in increased coal sales volumes, reflecting a 1.6% increase compared to the 2022 Period.

Total operating expenses .

Total operating expenses increased to $913.5 million in the 2023 Period, compared to $816.7 million in the 2022 Period, due primarily to higher per ton costs on certain expense items discussed in more detail below and increased coal sales volumes.

Net income attributable to ARLP .

Increased revenues and lower income tax expense, partially offset by higher total operating expenses, led net income attributable to ARLP for the 2023 Period to $361.0 million, or $2.75 per basic and diluted limited partner unit, compared to $201.6 million, or $1.51 per basic and diluted limited partner unit, for the 2022 Period.

Coal - Segment Adjusted EBITDA Expense .

Segment Adjusted EBITDA Expense for our coal operations increased 16.9% to $672.9 million, as a result of higher coal sales volumes and inflationary cost pressures.

On a per ton basis, Segment Adjusted EBITDA Expense for our coal operations increased 15.1% to $38.73 per ton sold in the 2023 Period compared to $33.66 per ton in the 2022 Period, primarily due to certain cost increases, which are discussed below by category:

● Labor and benefit expenses per ton produced, excluding workers' compensation, increased 16.5% to $11.55 per ton in the 2023 Period from $9.91 per ton in the 2022 Period.

The increase of $1.64 per ton was primarily due to higher incentive benefits and direct labor costs at several mines.

● Workers' compensation expenses per ton produced increased to $0.56 per ton in the 2023 Period from $0.14 per ton in the 2022 Period.

The increase of $0.42 per ton produced primarily reflects a favorable mid-year workers' compensation accrual adjustment in the 2022 Period due to an increase in the discount rate.

● Material and supplies expenses per ton produced increased 2.8% to $13.41 per ton in the 2023 Period from $13.04 per ton in the 2022 Period.

The increase of $0.37 per ton produced primarily reflects increases of $0.27 per ton for ventilation related expenses, $0.21 per ton for various preparation plant expenses, $0.15 per ton for safety related materials and supplies and $0.12 per ton for power and fuel, partially offset by a decrease of $0.49 per ton for roof support.

● Maintenance expenses per ton produced increased 24.3% to $4.24 per ton in the 2023 Period from $3.41 per ton in the 2022 Period.

The increase of $0.83 per ton produced was primarily as a result of inflationary cost pressures.

● Production taxes and royalty expenses per ton incurred as a percentage of coal sales prices and volumes increased $1.00 per produced ton sold in the 2023 Period compared to the 2022 Period primarily as a result of higher price realizations, increased excise taxes per ton resulting from a reduced mix of export shipments and higher federal black lung excise tax as a result of the tax rate increasing effective October 1, 2022, partially offset by a favorable mix of tons sold mined in states without severance taxes.

Other revenues .

Other revenues principally comprised Matrix Design sales, Mt.

Vernon transloading revenues, oil & gas lease bonus revenues and other miscellaneous sales and revenue activities.

Other revenues increased to $37.3

million in the 2023 Period from $25.7 million in the 2022 Period.

The increase of $11.6 million was primarily due to increased sales of mining technology products by our Matrix Design subsidiary.

Income tax expense.

Income tax expense decreased to $8.2 million for the 2023 Period compared to $49.0 million for the 2022 Period as a result of our recognition of a one-time non-cash income tax charge of $37.3 million during the 2022 Period when Alliance Minerals elected to be treated as a taxable entity for federal and state income tax purposes.

Segment Adjusted EBITDA.

Our 2023 Period Segment Adjusted EBITDA increased $118.8 million to $561.3 million from the 2022 Period Segment Adjusted EBITDA of $442.5 million.

Six Months Ended

Increase (Decrease)

(in thousands)

Segment Adjusted EBITDA

Illinois Basin Coal Operations

Appalachia Coal Operations

Oil & Gas Royalties

Coal Royalties

Other, Corporate and Elimination (2)

Total Segment Adjusted EBITDA (3)

Coal - Tons sold

Illinois Basin Coal Operations

Appalachia Coal Operations

Total tons sold

Illinois Basin Coal Operations

Appalachia Coal Operations

Total coal sales

Other revenues

Illinois Basin Coal Operations

Appalachia Coal Operations

Oil & Gas Royalties

Other, Corporate and Elimination

Total other revenues

Segment Adjusted EBITDA Expense

Illinois Basin Coal Operations

Appalachia Coal Operations

Oil & Gas Royalties

Coal Royalties

Other, Corporate and Elimination (2)

Total Segment Adjusted EBITDA Expense (3)

Oil & Gas Royalties

Volume - BOE (4)

Oil & gas royalties

Coal Royalties

Volume - Tons sold (5)

Intercompany coal royalties

(1) Recast for the JC Resources Acquisition.

For more information, please read "Item 1.

Financial Statements (Unaudited)—Note 1 – Organization and Presentation"

of this Quarterly Report on Form 10-Q.

(3) For definitions of Segment Adjusted EBITDA and Segment Adjusted EBITDA Expense and related reconciliations to their respective comparable GAAP financial measures, please see below under "—Reconciliation of GAAP 'net income' to non-GAAP 'Segment Adjusted EBITDA' and reconciliation of GAAP 'Operating Expenses' to non-GAAP 'Segment Adjusted EBITDA Expense.'"

(4) Barrels of oil equivalent ("BOE") is calculated on a 6:1 basis (6,000 cubic feet of natural gas to one barrel).

(5) Represents tons sold by our Coal Operations Segments that were produced from coal reserves leased from our Coal Royalties Segment.

Illinois Basin Coal Operations – Segment Adjusted EBITDA increased to $251.6 million in the 2023 Period from $175.6 million in the 2022 Period.

The increase of $76.0 million was primarily attributable to higher coal sales, which increased 22.9% to $668.7 million in the 2023 Period from $544.3 million in the 2022 Period, partially offset by increased operating expenses.

The increase in coal sales reflects higher coal sales price per ton, which increased by 17.4% compared to the 2022 Period reflecting increased domestic prices, and increased tons sold, which rose 4.6% in the 2023 Period as a result of increased sales volumes at the Warrior, Gibson South and Hamilton mines.

Segment Adjusted EBITDA Expense increased 13.3% to $421.7 million in the 2023 Period from $372.3 million in the 2022 Period primarily as a result of increased sales volumes and higher expenses per ton.

Segment Adjusted EBITDA Expense per ton increased $2.63 per ton sold to $34.41 from $31.78 per ton sold in the 2022 Period primarily as a result of inflationary pressures on numerous expense items, including labor-related expenses, maintenance costs and increased sales-related expenses due to higher price realizations.

Appalachia Coal Operations – Segment Adjusted EBITDA increased 28.9% to $226.1 million for the 2023 Period from $175.5 million in the 2022 Period.

The increase of $50.6 million was primarily attributable to higher coal sales, which increased 25.1% to $470.4 million in the 2023 Period from $375.9 million in the 2022 Period, due to increased prices.

Coal sales prices increased by 31.6% compared to the 2022 Period primarily due to increased export and domestic price realizations in the region.

Partially offsetting higher prices, coal sales volumes decreased 4.9% compared to the 2022 Period as a result of reduced export sales from our Tunnel Ridge operation and lower production across the region.

Segment Adjusted EBITDA Expense increased 21.9% to $245.1 million in the 2023 Period from $201.1 million in the 2022 Period due to higher per ton expenses.

Segment Adjusted EBITDA Expense per ton increased 28.2% to $47.90 compared to $37.36 per ton sold in the 2022 Period, as a result of increased longwall move days at the Tunnel Ridge and Mettiki mines, reduced recoveries at the MC Mining operation and inflationary pressures on certain expense items, most notably labor-related expenses and materials and maintenance costs, and increased sales-related expenses due to higher price realizations.

Oil & Gas Royalties – Segment Adjusted EBITDA decreased to $59.1 million for the 2023 Period from $68.5 million in the 2022 Period.

The decrease of $9.4 million was primarily due to lower average sales price per BOE, which decreased 33.6% to $44.34 per BOE, partially offset by increased volumes in the 2023 Period, which increased by 40.1%.

Higher BOE volumes during the 2023 Period resulted from increased drilling and completion activities on our properties and additional volumes from oil & gas mineral interest acquisitions.

Coal Royalties – Segment Adjusted EBITDA increased 8.3% to $21.1 million for the 2023 Period from $19.5 million in the 2022 Period.

The increase of $1.6 million was a result of higher average royalty rates per ton, partially offset by reduced royalty tons sold.

Reconciliation of GAAP "net income"

4 unchanged sentences

Segment Adjusted EBITDA is a key component of consolidated EBITDA, which is used as a supplemental financial measure by management and by external users of our financial statements such as investors, commercial banks, research analysts and others.

We believe that the presentation of EBITDA provides useful information to investors regarding our performance and results of operations because EBITDA, when used in conjunction with related GAAP financial measures, (i) provides additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provides investors with the financial analytical framework upon which we base financial, operational, compensation and planning decisions and (iii) presents a measurement that investors, rating agencies and debt holders have indicated is useful in assessing us and our results of operations.

We believe that the presentation of EBITDA provides useful information to investors regarding our performance and results of operations because EBITDA, when used in conjunction with related GAAP

financial measures, (i) provides additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provides investors with the financial analytical framework upon which we base financial, operational, compensation and planning decisions and (iii) presents a measurement that investors, rating agencies and debt holders have indicated is useful in assessing us and our results of operations.

Segment Adjusted EBITDA is also used as a supplemental financial measure by our management for reasons similar to those stated in the previous explanation of EBITDA.

2 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

13 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

Operating expenses (excluding depreciation, depletion and amortization)

Outside coal purchases

Other expense (income)

9 unchanged sentences

in our Annual Report on Form 10-K for the year ended December 31, 2022.

Oil & Gas Acquisitions — As of March 31, 2023, we have purchased mineral interests for $2.8 million with cash on hand under our $35.0 million Acquisition Agreement.

Oil & Gas Acquisitions — As of June 30, 2023, we have purchased mineral interests for $1.1 million and $3.9 million for the three and six months ended June 30, 2023, respectively, with cash on hand under our $35.0 million Acquisition Agreement.

Future acquisitions under the Acquisition Agreement are expected to be funded with cash on hand or cash generated from operations.

17 unchanged sentences

Unit Repurchase Program — In May 2018, the Board of Directors approved the establishment of a unit repurchase program authorizing us to repurchase up to $100 million of ARLP common units.

In January 2023, the Board of Directors authorized a $93.5 million increase to the unit repurchase program, which had $6.5 million of available

capacity as of December 31, 2022.

In January 2023, the Board

of Directors authorized a $93.5 million increase to the unit repurchase program, which had $6.5 million of available capacity as of December 31, 2022.

The program has no time limit and we may repurchase units from time to time in the open market or in other privately negotiated transactions.

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

During the three months ended March 31, 2023, we repurchased and retired 860,060 units at an average price of $21.17 for an aggregate purchase price of $18.2 million.

The timing of any future unit repurchases and the ultimate number of units to be purchased will depend on a number of factors, including business and market conditions, our future financial performance, and other capital priorities.

During the six months ended June 30, 2023, we repurchased and retired 929,842 units at an average price of $20.90 for an aggregate purchase price of $19.4 million.

The timing of any future unit repurchases and the ultimate number of units to be purchased will depend on several factors, including business and market conditions, our future financial performance, and other capital priorities.

Please read "Part II - Item 2.

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of this Quarterly Report on Form 10-Q for more information on the unit repurchase program.

Repurchase of Senior Notes — During the 2023 Quarter, we repurchased $26.6 million of our 7.5% senior notes due 2025.

At March 31, 2023, the aggregate principal amount of our outstanding 7.5% senior notes due 2025 was $373.4 million.

We expect to continue such purchases on an opportunistic basis.

Repurchase of Senior Notes — During the six months ended June 30, 2023, we repurchased $60.8 million of our 7.5% senior notes due 2025.

In July 2023, we redeemed an additional $50.0 million of our Senior Notes.

At June 30, 2023, the aggregate principal amount of our outstanding 7.5% senior notes due 2025 was $339.2 million.

We expect to continue additional purchases with available cash flows.

Shelf Registration Statement — We currently have an effective universal shelf Registration Statement on Form S-3 that provides for the registration and sale of an unspecified amount of our equity or debt securities.

We may over time, and subject to market conditions, in one or more offerings, offer and sell any of the securities described in the prospectus.

Cash provided by operating activities was $223.3 million for the 2023 Quarter compared to $90.6 million for the 2022 Quarter.

The increase in cash provided by operating activities was primarily due to an increase in net income adjusted for non-cash items and favorable working capital changes related primarily to trade receivables, prepaid expenses and accrued taxes other than income taxes.

These increases were partially offset by unfavorable working capital changes related primarily to other receivables, accounts payable and miscellaneous other changes compared to the 2022 Quarter.

Net cash used in investing activities was $148.7 million for the 2023 Quarter compared to $45.5 million for the 2022 Quarter.

The increase in cash used in investing activities was primarily attributable to an increase in capital expenditures and the acquisition of oil & gas reserves under the JC Resources Acquisition and Acquisition Agreement.

Cash provided by operating activities was $504.0 million for the 2023 Period compared to $239.4 million for the 2022 Period.

These increases were partially offset by unfavorable working capital changes related primarily to accrued payroll and related benefits accruals, as well as miscellaneous other changes compared to the 2022 Period.

Net cash used in investing activities was $277.6 million for the 2023 Period compared to $163.3 million for the 2022 Period.

The increase in cash used in investing activities was primarily attributable to an increase in capital expenditures, change in accounts payable and accrued liabilities and the acquisition of oil & gas reserves under the JC Resources Acquisition and the Acquisition Agreement.

These increases were partially offset by decreases in contributions to equity method investments and purchases of equity securities compared to the 2022 period.

Please read "Item 1.

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of this Quarterly Report on Form 10-Q for additional information about the JC Resources Acquisition and the Acquisition Agreement.

Net cash used in financing activities was $99.3 million for the 2023 Quarter compared to $39.3 million for the 2022 Quarter.

The increase in cash used in financing activities was primarily attributable to increased cash distributions paid to unitholders, the repurchase of senior notes during the 2023 Quarter, debt issuance costs and the purchase of units under the unit repurchase program.

Net cash used in financing activities was $237.5 million for the 2023 Period compared to $92.4 million for the 2022 Period.

The increase in cash used in financing activities was primarily attributable to increased cash distributions paid to unitholders, the repurchase of senior notes during the 2023 Period, debt issuance costs, settlements under deferred compensation plans and the purchase of units under the unit repurchase program.

These increases were partially offset by increased long-term borrowings.

Cash Requirements

Management anticipates having sufficient cash flow to meet 2023 cash requirements, including capital expenditures, scheduled payments on long-term debt, lease obligations, asset retirement obligation costs and workers' compensation and pneumoconiosis costs, with our March 31, 2023 cash and cash equivalents of $271.3 million and cash flows from operations, or borrowings under our Revolving Credit Facility and Securitization Facility if necessary.

Management anticipates having sufficient cash flow to meet 2023 cash requirements, including capital expenditures, scheduled payments on long-term debt, lease obligations, asset retirement obligation costs and workers' compensation and pneumoconiosis costs, with our June 30, 2023 cash and cash equivalents of $284.9 million, cash flows from operations, or borrowings under our Revolving Credit Facility and Securitization Facility, if necessary.

We currently project average estimated annual maintenance capital expenditures over the next five years of approximately $7.05 per ton produced.

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of this Quarterly Report on Form 10-Q for a discussion of our long-term debt obligations.

We also have an agreement with a bank to provide additional letters of credit in an amount of $5.0 million to maintain surety bonds to secure certain asset retirement obligations and our obligations for workers' compensation benefits.

On March 31, 2023, we had $5.0 million in letters of credit outstanding under this agreement.

We also have an agreement with a bank to provide additional letters of credit in the amount of $5.0 million to maintain surety bonds to secure certain asset retirement obligations and our obligations for workers' compensation benefits.

On June 30, 2023, we had $5.0 million in letters of credit outstanding under this agreement.

Related-Party Transactions

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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 2. Management’s Discussion and Analysis