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SEGMENT INFORMATION
 3 Months Ended
Mar. 31, 2022
SEGMENT INFORMATION  
SEGMENT INFORMATION

16.SEGMENT INFORMATION

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We operate in the United States as a diversified natural resource company that generates operating and royalty income from the production and marketing of coal to major domestic and international utilities and industrial users as well as royalty income from oil & gas mineral interests.  We aggregate multiple operating segments into four reportable segments, Illinois Basin Coal Operations, Appalachia Coal Operations, Oil & Gas Royalties and Coal Royalties.  We also have an "all other" category referred to as Other, Corporate and Elimination.  Our two coal operations reportable segments correspond to major coal producing regions in the eastern United States with similar economic characteristics including coal quality, geology, coal marketing opportunities, mining and transportation methods and regulatory issues.  The two coal operations reportable segments include seven mining complexes operating in Illinois, Indiana, Kentucky, Maryland, Pennsylvania and West Virginia and a coal-loading terminal in Indiana on the Ohio River.  Our Oil & Gas Royalties reportable segment includes our oil & gas mineral interests which are located primarily in the Permian (Delaware and Midland), Anadarko (SCOOP/STACK) and Williston (Bakken) basins.  The operations within our Oil & Gas Royalties reportable segment primarily include receiving royalties and lease bonuses for our oil & gas mineral interests. 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.

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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 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.    

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

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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.

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

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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.  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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Reportable segment results are presented below.

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Coal Operations

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Royalties

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Other,

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Illinois

    

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Corporate and

    

​

​

​

​

    

Basin

    

Appalachia

    

Oil & Gas

    

Coal

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Elimination

    

Consolidated

 

​

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(in thousands)

 

Three Months Ended March 31, 2022

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Revenues - Outside

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$

274,696

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$

145,299

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$

30,961

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$

—

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$

9,907

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$

460,863

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Revenues - Intercompany

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​

—

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​

—

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​

—

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15,167

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(15,167)

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​

—

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Total revenues (1)

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​

274,696

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​

145,299

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​

30,961

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​

15,167

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(5,260)

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​

460,863

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​

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Segment Adjusted EBITDA Expense (2)

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177,589

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​

83,715

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​

3,001

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​

4,819

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(7,944)

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261,180

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Segment Adjusted EBITDA (3)

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78,215

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​

51,103

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​

28,552

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​

10,348

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​

2,686

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170,904

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Total assets

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704,627

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​

425,929

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650,794

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​

291,153

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​

153,044

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2,225,547

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Capital expenditures

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36,547

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​

18,345

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​

—

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—

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​

4,261

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59,153

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Three Months Ended March 31, 2021

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Revenues - Outside

​

$

190,934

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$

108,619

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$

14,020

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$

—

​

$

5,049

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$

318,622

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Revenues - Intercompany

​

​

—

​

​

—

​

​

—

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​

11,301

​

​

(11,301)

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​

—

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Total revenues (1)

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​

190,934

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​

108,619

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​

14,020

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​

11,301

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(6,252)

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​

318,622

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Segment Adjusted EBITDA Expense (2)

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125,581

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​

73,726

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​

2,058

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​

4,028

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(7,676)

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197,717

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Segment Adjusted EBITDA (3)

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57,673

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​

31,506

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​

11,946

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​

7,273

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​

1,423

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109,821

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Total assets

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740,945

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​

442,595

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​

609,108

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​

294,333

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​

64,199

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2,151,180

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Capital expenditures

​

 

16,401

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​

11,666

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​

—

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​

—

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​

3,370

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31,437

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(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.

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(2)Segment Adjusted EBITDA Expense includes operating expenses, coal purchases and other income. Transportation expenses are excluded as transportation revenues are recognized in an amount equal to transportation expenses when title passes to the customer.  

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The following is a reconciliation of consolidated Segment Adjusted EBITDA Expense to Operating expenses (excluding depreciation, depletion and amortization):

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Three Months Ended

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​

March 31, 

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2022

    

2021

 

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(in thousands)

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Segment Adjusted EBITDA Expense

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$

261,180

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$

197,717

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Other income (expense)

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566

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(1,197)

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Operating expenses (excluding depreciation, depletion and amortization)

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$

261,746

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$

196,520

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(3)Segment Adjusted EBITDA is defined as net income attributable to ARLP before net interest expense, income taxes, depreciation, depletion and amortization, and general and administrative expenses.  Management therefore is able to focus solely on the evaluation of segment operating profitability as it relates to our revenues and operating expenses, which are primarily controlled by our segments.  Consolidated Segment Adjusted EBITDA is reconciled to net income as follows:

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Three Months Ended

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March 31, 

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​

​

2022

    

2021

 

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(in thousands)

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Consolidated Segment Adjusted EBITDA

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$

170,904

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$

109,821

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General and administrative

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(18,596)

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(15,504)

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Depreciation, depletion and amortization

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(63,314)

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(59,202)

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Interest expense, net

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(9,627)

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(10,379)

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Income tax (expense) benefit

​

 

(42,715)

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12

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Net income attributable to ARLP

​

$

36,652

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$

24,748

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Noncontrolling interest

​

​

290

​

​

78

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Net income

​

$

36,942

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$

24,826

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​