PART I [Business](index=15&type=section&id=ITEM%201.%20BUSINESS) ARLP is a diversified natural resource company producing and marketing coal, and generating royalty income from its mineral interests [General Overview](index=15&type=section&id=General) ARLP is a diversified natural resource company generating income from coal production and mineral royalties, listed on NASDAQ as 'ARLP' - ARLP is a diversified natural resource company generating income from coal production and marketing, as well as royalty income from coal and oil & gas mineral interests across the United States[21](index=21&type=chunk) - The company is the **second-largest coal producer** in the eastern U.S., with seven underground mining complexes in Illinois, Indiana, Kentucky, Maryland, Pennsylvania, and West Virginia[22](index=22&type=chunk) - ARLP owns mineral and royalty interests in approximately **1.5 million gross acres** in premier U.S. oil & gas producing regions, primarily the Permian, Anadarko, and Williston Basins[23](index=23&type=chunk) - Strategic growth in the Oil & Gas Royalties segment has been driven by key acquisitions: the **Boulders Acquisition in 2021**, the **Wing Acquisition in 2019**, and the **AllDale I & II Acquisition in 2019**[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) [Coal Mining Operations](index=18&type=section&id=Coal%20Mining%20Operations) ARLP's coal mining operations produced 32.2 million tons in 2021, primarily from the Illinois Basin and Appalachia, with sales to domestic and international markets 2021 Coal Sales & Production Summary | Metric | Value | | :--- | :--- | | Tons Sold | 32.3 million | | Tons Produced | 32.2 million | | Domestic Utility Sales | 81.6% of tons sold | | International Market Sales | 12.5% of tons sold | Coal Production by Region (Tons in millions) | Region | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Illinois Basin | 22.2 | 17.9 | 29.5 | | Appalachia | 10.0 | 9.1 | 10.5 | | **Total** | **32.2** | **27.0** | **40.0** | - In 2021, approximately **77.9% of sales tonnage** was sold under long-term contracts with terms ranging from 2021 to 2026[53](index=53&type=chunk) - Louisville Gas and Electric Company was a major customer, accounting for over **10% of total revenue** in 2021[58](index=58&type=chunk) [Mineral Interest Activities](index=27&type=section&id=Mineral%20Interest%20Activities) ARLP's mineral interests include oil & gas royalties from 57,000 net acres and coal royalties from significant reserves leased to mining operations - The company holds approximately **57,000 net royalty acres** for oil & gas, primarily in the Permian, Anadarko, and Williston Basins[63](index=63&type=chunk) Oil & Gas Production (2019-2021) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Oil (MBbls) | 825 | 948 | 741 | | Natural gas (MMcf) | 3,490 | 3,635 | 3,664 | | NGLs (MBbls) | 357 | 337 | 364 | | **Total BOE (MBbls)** | **1,764** | **1,892** | **1,716** | - The Coal Royalties segment includes **422.9 million tons of proven and probable reserves** and **1.17 billion tons of measured, indicated, and inferred coal mineral resources**, which are leased to mining operations[77](index=77&type=chunk) Coal Royalty Tons Sold by Region (Tons in millions) | Region | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Illinois Basin | 18.9 | 16.6 | 20.9 | | Appalachia | 1.3 | 2.3 | 2.1 | | **Total** | **20.2** | **18.9** | **23.0** | [Environmental, Health, and Safety Regulations](index=38&type=section&id=Environmental,%20Health,%20and%20Safety%20Regulations) ARLP's operations are subject to extensive environmental, health, and safety regulations, significantly impacting costs and future coal demand - Operations are heavily regulated in areas such as employee health and safety, permits, air and water quality, and reclamation, which increases the cost of doing business[96](index=96&type=chunk) - The Federal Mine Safety and Health Act (FMSHA) and the MINER Act impose stringent safety standards and penalties, significantly affecting operating costs[105](index=105&type=chunk)[107](index=107&type=chunk) - Regulations under the Clean Air Act (CAA) affecting coal-fired power plants, such as MATS and CSAPR, have led to plant retirements and could reduce future coal demand[126](index=126&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) - Future regulation of Greenhouse Gas (GHG) emissions, both domestically and internationally (e.g., the Paris Agreement), poses a significant risk to the long-term demand for fossil fuels[140](index=140&type=chunk) [Human Capital](index=60&type=section&id=Human%20Capital) As of December 31, 2021, ARLP employed 2,990 union-free personnel, prioritizing competitive compensation, benefits, and workplace safety - As of December 31, 2021, the company employed **2,990 full-time employees**, with a completely union-free workforce[167](index=167&type=chunk) - Workplace safety is a fundamental part of the company culture. The Non-Fatal Days Lost (NFDL) rating for 2021 was **3.26**, below the preliminary industry average[169](index=169&type=chunk) - The company offers competitive compensation packages, including base salary, incentive compensation, and comprehensive health benefits with no out-of-pocket premiums for employees[168](index=168&type=chunk)[170](index=170&type=chunk) [Risk Factors](index=63&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces diverse risks including partnership structure, business operations, volatile commodity prices, extensive environmental regulations, and tax implications for unitholders - **Investment Risks:** Cash distributions are not guaranteed and were suspended in 2020 before resuming in 2021. Unitholders have limited voting rights and do not elect the general partner[181](index=181&type=chunk)[190](index=190&type=chunk) - **Business & Operational Risks:** The business is exposed to global economic conditions, the impacts of pandemics like COVID-19, reliance on key customers, and potential for cyber-attacks[208](index=208&type=chunk)[210](index=210&type=chunk)[226](index=226&type=chunk) - **Industry & Regulatory Risks:** The company faces volatile coal and oil & gas prices, intense competition, and extensive, costly environmental regulations. Legislative initiatives related to hydraulic fracturing and climate change could significantly impact demand and operations[230](index=230&type=chunk)[276](index=276&type=chunk)[294](index=294&type=chunk) - **Tax Risks:** The partnership's tax treatment is crucial; if treated as a corporation, cash available for distribution would be substantially reduced. Unitholders are required to pay taxes on their share of taxable income regardless of cash distributions received[339](index=339&type=chunk)[350](index=350&type=chunk) [Properties](index=121&type=section&id=ITEM%202.%20PROPERTIES) This section details ARLP's coal properties, with 547.1 million tons of proven and probable reserves, and oil & gas interests with 15.9 million BOE of proved reserves [Coal Mineral Resources and Reserves](index=121&type=section&id=Coal%20Mineral%20Resources%20and%20Reserves) As of December 31, 2021, ARLP held 547.1 million tons of proven and probable coal reserves and 1.17 billion tons of resources in key basins Coal Mineral Resources & Reserves (as of Dec 31, 2021) | Category | Tons (in millions) | | :--- | :--- | | Mineral Resources (exclusive of reserves) | 1,165.5 | | Proven & Probable Mineral Reserves | 547.1 | - Material properties with detailed disclosures include Henderson/Union, River View, Hamilton, Gibson South, and Tunnel Ridge[383](index=383&type=chunk) - Reserve and resource estimates were prepared by the independent engineering firm RESPEC Company, LLC[372](index=372&type=chunk) [Oil & Gas Reserves](index=144&type=section&id=Oil%20%26%20Gas%20Reserves) As of December 31, 2021, ARLP's net proved oil & gas reserves totaled 15.9 million BOE, primarily in Permian, Anadarko, and Williston Basins Net Proved Oil & Gas Reserves (as of Dec 31, 2021) | Category | Crude Oil (MBbl) | Natural Gas (MMcf) | NGLs (MBbl) | Total (MBOE) | | :--- | :--- | :--- | :--- | :--- | | Proved Developed | 5,493 | 28,426 | 3,039 | 13,269 | | Proved Undeveloped | 1,353 | 4,126 | 578 | 2,618 | | **Total Proved** | **6,846** | **32,552** | **3,617** | **15,887** | - **95%** of the 2021 year-end proved reserve estimates were audited by the independent petroleum engineering firm Netherland, Sewell & Associates, Inc. (NSAI)[452](index=452&type=chunk) - Proved undeveloped reserves (PUDs) decreased from **4,533 MBOE** at the start of 2021 to **2,618 MBOE** at year-end, primarily due to transfers to proved developed status and negative revisions[446](index=446&type=chunk) [Legal Proceedings](index=151&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) ARLP faces lawsuits alleging wage and hour violations with potential damages up to $143.7 million, which management intends to vigorously defend - ARLP subsidiaries are defendants in multiple lawsuits alleging violations of the Fair Labor Standards Act and state wage laws related to compensation for 'donning and doffing' equipment and overtime calculations[467](index=467&type=chunk) - The plaintiffs in two of the lawsuits allege collective damages ranging from approximately **$22.2 million to $143.7 million**[467](index=467&type=chunk) - Management believes the claims are without merit and does not expect the litigation to have a material adverse effect on the business, though the outcome is not certain[467](index=467&type=chunk) [Mine Safety Disclosures](index=152&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section provides mine safety violation disclosures as required by the Dodd-Frank Act, detailed in Exhibit 95.1 of the Form 10-K - Information regarding mine safety violations required by the Dodd-Frank Wall Street Reform and Consumer Protection Act is included in Exhibit 95.1 to this Form 10-K[468](index=468&type=chunk) PART II [Market for Registrant's Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities](index=153&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY,%20RELATED%20UNITHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) ARLP's common units trade on NASDAQ under 'ARLP', with a $100 million unit repurchase program having $6.5 million remaining authorization - The company's common units are listed on the NASDAQ Global Select Market under the symbol '**ARLP**'[470](index=470&type=chunk) - A unit repurchase program authorized up to **$100 million** was established in May 2018. As of year-end 2021, **$93.5 million** had been used to repurchase **5,460,639 units**, with **$6.5 million** remaining[473](index=473&type=chunk)[474](index=474&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=154&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) ARLP's 2021 financial performance improved significantly with revenues of $1.57 billion and net income of $178.2 million, driven by higher coal sales and oil & gas prices [Results of Operations](index=160&type=section&id=Results%20of%20Operations) In 2021, total revenues increased 18.2% to $1.57 billion, resulting in a net income of $178.2 million, a significant turnaround from 2020 - Total revenues increased **18.2%** to **$1.57 billion** in 2021 from **$1.33 billion** in 2020, primarily due to increased coal sales volumes and higher oil & gas prices[506](index=506&type=chunk) Financial Performance (2021 vs. 2020) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net Income (Loss) Attributable to ARLP | $178.2 million | ($129.2 million) | | Coal Tons Sold | 32.3 million | 28.2 million | | Average Coal Sales Price per Ton | $42.98 | $43.68 | | Segment Adjusted EBITDA | $549.3 million | $446.5 million | - The Illinois Basin segment's Adjusted EBITDA increased **24.0%** to **$265.3 million**, driven by a **16.5%** increase in sales volumes[521](index=521&type=chunk) - The Oil & Gas Royalties segment's Adjusted EBITDA increased **72.9%** to **$68.8 million**, primarily due to significantly higher sales price realizations per BOE[521](index=521&type=chunk) [Liquidity and Capital Resources](index=179&type=section&id=Liquidity%20and%20Capital%20Resources) ARLP maintained strong 2021 liquidity with $425.2 million in operating cash flow, $122.4 million cash, and $415.4 million available credit - Cash provided by operating activities was **$425.2 million** for 2021, an increase from **$400.6 million** in 2020[551](index=551&type=chunk) - As of December 31, 2021, the company had **$122.4 million** in cash and cash equivalents and **$415.4 million** available for borrowing under its Revolving Credit Facility[555](index=555&type=chunk)[741](index=741&type=chunk) - Total long-term debt was **$443.1 million** as of December 31, 2021[215](index=215&type=chunk) - Estimated 2022 cash requirements, including capital expenditures and debt payments, are projected to be between **$380.0 million and $400.0 million**[555](index=555&type=chunk) [Critical Accounting Policies and Estimates](index=181&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies involve significant estimates for goodwill, oil & gas reserves, workers' compensation, and asset retirement obligations - Key estimates include goodwill impairment, oil & gas reserve values, asset retirement obligations, and liabilities for workers' compensation and pneumoconiosis benefits[563](index=563&type=chunk) - In 2020, the company recorded a **$132.0 million** non-cash goodwill impairment charge related to the Hamilton mine due to weakened coal market conditions[573](index=573&type=chunk) - The aggregate undiscounted cost of final mine closure (asset retirement obligations) is estimated at **$229.4 million** as of December 31, 2021[591](index=591&type=chunk) - Accrued liabilities for workers' compensation and pneumoconiosis benefits totaled **$53.4 million** and **$111.3 million**, respectively, at year-end 2021, based on actuarial estimates[581](index=581&type=chunk)[582](index=582&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=191&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) ARLP is exposed to commodity price, credit, and interest rate risks, with some mitigation from long-term coal contracts - **Commodity Price Risk:** The company is exposed to price volatility for coal, oil, and natural gas. In 2021, **77.9% of coal tonnage** was sold under long-term contracts, which helps mitigate risk. The company does not currently use commodity price hedges[599](index=599&type=chunk)[601](index=601&type=chunk) - **Credit Risk:** Risk is concentrated with U.S. electric utilities and international brokerage firms. This is managed through credit evaluations, and when necessary, letters of credit or prepayments[602](index=602&type=chunk) - **Interest Rate Risk:** The company has exposure on its variable-rate Revolving Credit Facility and Securitization Facility, but no balances were outstanding at December 31, 2021. Fixed-rate debt totaled **$443.1 million**[606](index=606&type=chunk) [Financial Statements and Supplementary Data](index=194&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents ARLP's audited consolidated financial statements for 2021, including balance sheets, income statements, cash flows, and detailed notes Key Financial Statement Balances (as of Dec 31, 2021) | Account | Amount (in thousands) | | :--- | :--- | | Total Assets | $2,159,406 | | Total Liabilities | $933,337 | | Total Partners' Capital | $1,226,069 | | **Total Liabilities and Partners' Capital** | **$2,159,406** | Key Income Statement Items (for year ended Dec 31, 2021) | Account | Amount (in thousands) | | :--- | :--- | | Total Revenues | $1,569,976 | | Income from Operations | $219,203 | | Net Income Attributable to ARLP | $178,157 | | Earnings Per Unit (Basic & Diluted) | $1.36 | - The financial statements are accompanied by **25 detailed notes** that explain the company's accounting policies and provide breakdowns of significant financial statement line items, such as debt, acquisitions, and segment information[610](index=610&type=chunk) [Controls and Procedures](index=282&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management and independent auditors concluded that ARLP's disclosure controls and internal control over financial reporting were effective as of December 31, 2021 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2021[916](index=916&type=chunk) - Based on the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2021[920](index=920&type=chunk) - The independent registered public accounting firm, Grant Thornton LLP, provided an unqualified opinion on the effectiveness of the company's internal control over financial reporting[922](index=922&type=chunk)[925](index=925&type=chunk) PART III [Directors, Executive Officers and Corporate Governance of the General Partner](index=288&type=section&id=ITEM%2010.%20DIRECTORS,%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE%20OF%20THE%20GENERAL%20PARTNER) This section details the executive officers and directors of ARLP's general partner, including governance structure and code of ethics - Joseph W. Craft III is the Chairman, President, and Chief Executive Officer of the general partner and indirectly owns it[934](index=934&type=chunk) - The Board of Directors' Audit Committee is composed of **four members**, all of whom have been determined to be independent under NASDAQ and SEC rules[955](index=955&type=chunk) - The company has adopted a code of ethics for its principal executive officer and senior financial officers, which is available on its website[962](index=962&type=chunk) [Executive Compensation](index=298&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Executive compensation, overseen by the Compensation Committee, includes base salary, annual cash incentives, and long-term equity awards tied to performance - The primary components of executive compensation are base salary, an annual cash Short-Term Incentive Plan (STIP), and equity awards under the Long-Term Incentive Plan (LTIP)[980](index=980&type=chunk) - CEO Joseph W. Craft III's compensation is distinct due to his significant equity ownership. His annual base salary has been **$1** since February 2016, and he has not received a STIP bonus since 2005[979](index=979&type=chunk) - The 2021 STIP was based on an EBITDA performance target of **$371.1 million**, which the company exceeded[987](index=987&type=chunk) - LTIP awards granted in 2021 consist of restricted units that cliff vest on January 1, 2024, contingent on achieving an aggregate EBITDA target for the 2021-2023 period[996](index=996&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters](index=327&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20UNITHOLDER%20MATTERS) This section details beneficial ownership of ARLP's common units, with Joseph W. Craft III holding 15.3% and all directors/executive officers holding 16.8% Beneficial Ownership of Common Units (as of Feb 2, 2022) | Beneficial Owner | Percentage Owned | | :--- | :--- | | Joseph W. Craft III | 15.3% | | Kathleen S. Craft | 12.8% | | All directors and executive officers as a group | 16.8% | [Certain Relationships and Related Transactions, and Director Independence](index=328&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS,%20AND%20DIRECTOR%20INDEPENDENCE) ARLP engages in related-party transactions, including administrative services, aircraft sharing, and coal leases, reviewed by the Conflicts Committee - The general partner is reimbursed for all direct and indirect expenses incurred on ARLP's behalf; total costs billed were approximately **$0.7 million** in 2021[1072](index=1072&type=chunk) - The company has aircraft time-sharing and pilot expense reimbursement agreements with JC Land, LLC, an affiliate of CEO Joseph W. Craft III[1073](index=1073&type=chunk)[1074](index=1074&type=chunk)[1076](index=1076&type=chunk) - ARLP has coal lease agreements with the Craft Foundations for properties operated by the Tunnel Ridge and MC Mining complexes, involving royalty payments[847](index=847&type=chunk)[1077](index=1077&type=chunk) - The Board of Directors has **four independent directors**: Messrs. Torrence, Carter, Druten, and Robinson, who comprise the Audit, Compensation, and Conflicts Committees[1081](index=1081&type=chunk) [Principal Accountant Fees and Services](index=331&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) This section details fees paid to independent accounting firms, Grant Thornton LLP in 2021 and Ernst & Young LLP in 2020, for audit and tax services Accountant Fees (in thousands) | Fee Type | 2021 (Grant Thornton) | 2020 (Ernst & Young) | | :--- | :--- | :--- | | Audit Fees | $670 | $1,349 | | Tax Fees | $0 | $339 | | **Total** | **$670** | **$1,688** | - The Audit Committee is responsible for pre-approving all auditing and permitted non-audit services performed by the independent registered public accounting firm[1085](index=1085&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=332&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including corporate documents and required certifications - Lists all financial statements and schedules included in the report, such as the Condensed Financial Information of Registrant (Schedule I)[1087](index=1087&type=chunk)[1089](index=1089&type=chunk) - Includes an index of all exhibits filed with the report, such as governance documents, material contracts, debt agreements, and compensation plans[1090](index=1090&type=chunk) - Certifications by the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act are filed as exhibits[1115](index=1115&type=chunk)[1116](index=1116&type=chunk)[1117](index=1117&type=chunk) - Technical Report Summaries for material mining properties and the audit report for oil & gas reserves are included as exhibits[1120](index=1120&type=chunk)

Alliance Resource Partners, L.P. (NASDAQ:ARLP) Q4 2021 Earnings Conference Call January 31, 2022 10:00 AM ET Company Participants Brian Cantrell - Senior Vice President and Chief Financial Officer Joe Craft - Chairman, President and Chief Executive Officer Conference Call Participants Nathan Martin - The Benchmark Company Scott Ferguson - Pacific Value Lucas Pipes - B. Riley Securities Arthur Calavritinos - ANC Capital Operator Greetings. Welcome to Alliance Resource Partners, L.P. Fourth Quarter 2021 Earni ...

[PART I FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=ITEM%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, and cash flows, for periods ended June 30, 2021 and 2020, highlighting the company's return to profitability in Q2 2021 with **$44.2 million** net income [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Total assets decreased to **$2.116 billion** as of June 30, 2021, from **$2.166 billion** at year-end 2020, while total liabilities decreased more significantly, leading to increased partners' capital and a return to profitability in Q2 2021 with **$44.2 million** net income Condensed Consolidated Balance Sheet (in $ thousands) | Balance Sheet Highlights | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $260,953 | $245,774 | | **Total Assets** | **$2,115,513** | **$2,166,016** | | **Total Current Liabilities** | $203,730 | $214,605 | | **Total Liabilities** | **$980,993** | **$1,093,749** | | **Total Partners' Capital** | **$1,134,520** | **$1,072,267** | Condensed Consolidated Statements of Operations (in $ thousands, except per unit data) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $362,443 | $255,202 | $681,065 | $605,965 | | **Income (Loss) from Operations** | $55,007 | $(35,100) | $91,335 | $(167,780) | | **Net Income (Loss)** | $44,165 | $(46,679) | $68,991 | $(191,386) | | **Net Income (Loss) Attributable to ARLP** | $44,035 | $(46,664) | $68,783 | $(191,447) | | **EPS - Basic and Diluted** | $0.34 | $(0.37) | $0.53 | $(1.51) | Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, in $ thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $158,216 | $170,168 | | **Net Cash used in Investing Activities** | $(50,247) | $(87,463) | | **Net Cash used in Financing Activities** | $(125,794) | $(84,081) | | **Net Change in Cash** | $(17,825) | $(1,376) | | **Cash at End of Period** | $37,749 | $35,106 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies and financial items, including **$157.0 million** in non-cash asset and goodwill impairments in Q1 2020, the Q1 2021 restructuring into a new Coal Royalties segment, and specifics on long-term debt and revenue disaggregation - In the first quarter of 2020, the company recorded **$23.5 million** in non-cash asset impairment charges in its Illinois Basin segment and a **$132.0 million** goodwill impairment charge related to the Hamilton mine, driven by adverse market conditions and the impact of the COVID-19 pandemic[23](index=23&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) Long-Term Debt Summary (in $ thousands) | Debt Component | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Revolving credit facility | $— | $87,500 | | Senior notes | $400,000 | $400,000 | | Securitization facility | $38,100 | $55,900 | | Equipment financings & other | $53,674 | $60,380 | | **Total Principal** | **$491,774** | **$603,780** | | Less current maturities | ($55,558) | ($73,199) | | **Total Long-Term Debt** | **$436,216** | **$530,581** | - Beginning in Q1 2021, the company restructured its reportable segments to manage its coal royalty activities separately from its coal mining operations, creating a new Coal Royalties segment[89](index=89&type=chunk)[90](index=90&type=chunk) Segment Adjusted EBITDA (in $ thousands) | Segment | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Illinois Basin Coal Operations | $70,623 | $22,667 | $128,296 | $66,000 | | Appalachia Coal Operations | $41,641 | $30,279 | $73,147 | $77,581 | | Oil & Gas Royalties | $15,379 | $6,881 | $27,325 | $20,636 | | Coal Royalties | $6,782 | $3,757 | $14,055 | $10,666 | | **Consolidated Segment Adjusted EBITDA** | **$136,092** | **$62,056** | **$245,913** | **$173,757** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=34&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This MD&A details the company's significant operational and financial recovery in H1 2021, driven by a **51.3%** increase in coal sales volume and higher oil & gas prices, leading to a **119.3%** increase in Segment Adjusted EBITDA and resumed unitholder distributions [Results of Operations](index=36&type=section&id=Results%20of%20Operations) ARLP reported **$44.0 million** net income in Q2 2021, a turnaround from a **$46.7 million** net loss in Q2 2020, driven by a **42.0%** increase in total revenues to **$362.4 million** and a **51.3%** rise in coal sales volume - The company's financial results for Q2 2021 showed significant improvement compared to Q2 2020, benefiting from reduced disruptions from the COVID-19 pandemic which had negatively impacted global energy demand in the prior year[112](index=112&type=chunk)[113](index=113&type=chunk) Q2 2021 vs Q2 2020 Key Operating Metrics | Metric | Q2 2021 | Q2 2020 | | :--- | :--- | :--- | | Coal - Tons sold (thousands) | 7,846 | 5,186 | | Coal - Avg. Sales Price ($/ton) | $41.55 | $45.56 | | Coal - Segment Adj. EBITDA Expense ($/ton) | $27.90 | $36.67 | | Oil & Gas - BOE sold (thousands) | 391 | 411 | | Oil & Gas - Avg. Sales Price ($/BOE) | $43.73 | $18.92 | - Illinois Basin Coal Operations' Segment Adjusted EBITDA surged **211.6%** to **$70.6 million** in Q2 2021, driven by a **61.9%** increase in sales volumes as demand recovered from pandemic lows[124](index=124&type=chunk)[128](index=128&type=chunk) - Oil & Gas Royalties' Segment Adjusted EBITDA grew **123.5%** to **$15.4 million** in Q2 2021, primarily due to significantly higher sales price realizations per Barrel of Oil Equivalent (BOE)[124](index=124&type=chunk)[130](index=130&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$158.2 million** cash from operations in H1 2021, reduced capital expenditures to **$55.6 million**, **$437.7 million** available under its Revolving Credit Facility, and resumed unitholder distributions - The company believes existing cash, future cash flows from operations, and borrowing availability will be sufficient to meet working capital, capital expenditures, debt payments, and distribution payments[155](index=155&type=chunk) Six-Month Cash Flow and Capex Summary (in $ millions) | Metric | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Cash from Operations | $158.2 | $170.2 | | Cash used in Investing | $(50.2) | $(87.5) | | Cash used in Financing | $(125.8) | $(84.1) | | Capital Expenditures | $55.6 | $84.2 | - As of June 30, 2021, the company had **$437.7 million** available for borrowing under its Revolving Credit Facility and was in compliance with all debt covenants, with a debt to cash flow ratio of **1.08 to 1.0** (well below the maximum of 2.5 to 1.0)[163](index=163&type=chunk)[164](index=164&type=chunk) - Distributions to unitholders, which had been suspended after February 2020, resumed with a **$0.10 per unit** payment in May 2021[158](index=158&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=57&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks include commodity price fluctuations for coal, oil, and natural gas, credit risk from its customer base, and interest rate risk on variable-rate debt, with minimal exchange rate risk - The company's main market risks are commodity price fluctuations for coal, oil, and gas, credit risk with utility and brokerage customers, and interest rate risk on variable-rate debt under its Revolving Credit and Securitization facilities[178](index=178&type=chunk)[180](index=180&type=chunk)[184](index=184&type=chunk) - A **one percentage point** increase in interest rates on the Securitization Facility would result in an annualized increase in interest expense of **$0.4 million** based on the June 30, 2021 balance[184](index=184&type=chunk) [Item 4. Controls and Procedures](index=59&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with security enhancements implemented following a non-material cyber incident to strengthen internal controls - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2021[185](index=185&type=chunk) - Following a non-material cyber incident during the quarter, the company implemented security enhancements like two-factor authentication and improved network backup processes to strengthen its internal controls[186](index=186&type=chunk) [PART II OTHER INFORMATION](index=63&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=63&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is defending multiple lawsuits alleging wage and hour law violations, with claims ranging from **$22.2 million** to **$143.7 million**, but believes the claims lack merit and expects no material adverse effect - The company is defending multiple lawsuits alleging violations of wage and hour laws, with plaintiffs in two of the cases claiming damages ranging from approximately **$22.2 million** to **$143.7 million**[194](index=194&type=chunk) [Item 1A. Risk Factors](index=63&type=section&id=ITEM%201A.%20Risk%20Factors) This section refers to the risk factors detailed in the 2020 Annual Report on Form 10-K, indicating no material changes to previously disclosed risks that could affect the business - The report refers investors to the risk factors disclosed in the 2020 Annual Report on Form 10-K, stating they could materially affect the business[195](index=195&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No common units were repurchased in Q2 2021; since inception, **5,460,639** units have been repurchased for **$93.5 million**, with **$6.5 million** remaining under the authorized program - No units were repurchased in Q2 2021[196](index=196&type=chunk) - Since inception, the company has repurchased **5,460,639** units for **$93.5 million**, with **$6.5 million** remaining under the authorized program[197](index=197&type=chunk) [Other Items (3, 4, 5, 6)](index=63&type=section&id=Other%20Items%20(3,%204,%205,%206)) This section confirms no defaults on senior securities, refers to Exhibit 95.1 for mine safety disclosures, reports no other material information, and lists filed exhibits - The company reports no defaults on senior securities[198](index=198&type=chunk) - Mine safety disclosures as required by the Dodd-Frank Act are provided in Exhibit 95.1 to the report[198](index=198&type=chunk)

Financial Data and Key Metrics Changes - Total revenues increased by 13.8% to $362.4 million compared to the sequential quarter, while net income jumped 77.9% to $44 million or $0.34 per unit, and EBITDA climbed 25.7% to $118.6 million [6] - Compared to the 2020 quarter, total revenues increased by 42%, net income rose by $90.7 million, and EBITDA surged by 145.9% [9] - Free cash flow generated in the quarter was $79.4 million, with $12.7 million returned to unit holders and $59.5 million used to reduce total debt and finance lease obligations [8] Business Segment Data and Key Metrics Changes - Coal sales volumes increased by 14.9% during the quarter, leading coal sales revenues to rise by 13.4% to $326 million compared to the sequential quarter [10][11] - The royalty business segment delivered $22.2 million of segment adjusted EBITDA, a 15.3% increase over the sequential quarter, with oil and gas royalties contributing $15.4 million [12] Market Data and Key Metrics Changes - Power demand in primary U.S. markets surged by 7.5% through the first half of 2021, with coal consumption expected to rebound by 16% for the full year [13][14] - International coal demand is rising due to global economic expansion post-COVID-19, with U.S. thermal coal exports projected to increase to 41-45 million short tons this year [15] Company Strategy and Development Direction - The company is increasing its full year 2021 guidance for coal sales volumes by approximately 6% to 32.9 million tons due to favorable coal market fundamentals [13] - The company is actively evaluating opportunities to increase production and sales in response to strong coal demand and pricing through 2022 [16] Management's Comments on Operating Environment and Future Outlook - Management noted that the current tight labor market may limit production increases despite strong demand [16] - The company is optimistic about the contribution of its royalty segment to consolidated results, expecting continued growth in oil and gas production [17] Other Important Information - The company ended the quarter with liquidity of $500.5 million and reduced total leverage to 1.08 times, a 32.1% improvement since the beginning of the year [8] Q&A Session Summary Question: Inquiry about incremental pricing and commitments - Management indicated that some pricing was secured before the recent price increase, but they have factored this into their guidance, raising the average sales price by approximately $0.50 a ton [20] Question: Discussion on pricing trends in the market - Management confirmed that they are seeing strong pricing levels and do not anticipate a decrease in prices due to tight supply in the domestic market [24] Question: Potential priorities for free cash flow - Management stated that uncertainty in future prices makes it difficult to specify cash flow capital allocations at this time, but they will provide clarity in future calls [26] Question: Comments on cost pressures and guidance - Management acknowledged inflationary pressures from steel, oil, and labor, but noted that increased production is coming from lower-cost mines [28] Question: Discussion on leverage and capital allocation - Management emphasized a focus on growth opportunities while maintaining a target leverage level of one time [35] Question: Inquiry about labor relations and union activity - Management clarified that they are a non-union operator and are focused on maintaining good relationships with employees amid a tight labor market [38] Question: Discussion on the royalty portfolio and its value - Management highlighted that the standalone value of their oil and gas royalty segment is not fully reflected in current valuations, with potential for increased activity as commodity prices improve [42]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________to________________ Commission File No.: 0-26823 ALLIANCE RESOURCE PARTNERS, L.P. (Exact name of registrant as specified in its char ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________to________________ Commission File No.: 0-26823 ALLIANCE RESOURCE PARTNERS, L.P. (Exact name of registrant as specified in its charter) ...

Alliance Resource Partners, L.P. (NASDAQ:ARLP) Q1 2020 Results Conference Call May 8, 2020 10:00 AM ET Company Participants Brian Cantrell - SVP and CFO Joe Craft - Chairman, President and CEO Conference Call Participants Mark Levin - Seaport Global Lucas Pipes - B. Riley FBR Nick Jarmoszuk - Stifel Shelly McNulty - Loomis Sayles Eric Fredback - Pacific Value Operator Good morning and welcome to Alliance Resource Partners, L.P. First Quarter 2020 Earnings Conference Call. All participants will be in listen- ...