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SEGMENT INFORMATION
 3 Months Ended
Mar. 31, 2023
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, metallurgical and industrial users as well as royalty income from oil & gas mineral interests. In addition, we continue to position ourselves as a reliable energy partner for the future as we pursue opportunities that support the advancement of energy and related infrastructure. 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 (a) the Gibson County Coal, LLC's ("Gibson County Coal") mining complex, (b) the Warrior Coal, LLC ("Warrior") mining complex, (c) the River View mining complex and (d) the 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 mining complexes.      

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

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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 – Investments) 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, its subsidiaries, and Alliance Design Group, LLC (collectively referred to as the "Matrix Group"), our investments in Francis, Infinitum and NGP ETP IV (see Note 9 – Investments), Wildcat Insurance, 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

    

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​

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Basin

    

Appalachia

    

Oil & Gas

    

Coal

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Elimination

    

Consolidated

 

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(in thousands)

 

Three Months Ended March 31, 2023

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Revenues - Outside

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$

360,406

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$

251,259

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$

35,537

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$

—

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$

15,720

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$

662,922

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Revenues - Intercompany

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​

—

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—

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—

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15,513

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(15,513)

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​

—

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Total revenues (2)

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​

360,406

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​

251,259

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35,537

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​

15,513

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​

207

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662,922

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Segment Adjusted EBITDA Expense (3)

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207,069

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​

125,799

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​

4,424

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​

5,388

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(3,384)

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339,296

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Segment Adjusted EBITDA (4)

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132,008

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​

116,550

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30,045

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10,125

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3,219

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291,947

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Total assets

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840,792

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​

459,834

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768,728

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326,064

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392,331

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2,787,749

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Capital expenditures (5)

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61,982

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32,505

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2

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​

400

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​

585

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95,474

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Three Months Ended March 31, 2022

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Revenues - Outside (1)

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$

274,696

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$

145,299

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$

33,520

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$

—

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$

9,907

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$

463,422

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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 (2)

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274,696

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​

145,299

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​

33,520

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​

15,167

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(5,260)

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​

463,422

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Segment Adjusted EBITDA Expense (1) (3)

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177,589

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83,715

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​

3,277

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4,819

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(7,944)

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261,456

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Segment Adjusted EBITDA (1) (4)

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78,215

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51,103

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30,835

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10,348

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2,686

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173,187

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Total assets (1)

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704,627

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​

425,929

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718,710

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​

291,153

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​

153,044

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2,293,463

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Capital expenditures (5)

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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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(1)Recast for the JC Resources Acquisition as discussed in Note 1 – Organization and Presentation.
(2)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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(3)Segment Adjusted EBITDA Expense includes operating expenses, coal purchases, if applicable, 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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2023

    

2022

 

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(in thousands)

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Operating expenses (excluding depreciation, depletion and amortization)

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$

338,723

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$

262,023

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Other expense (income)

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573

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(567)

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Segment Adjusted EBITDA Expense

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$

339,296

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$

261,456

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(4)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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2023

    

2022

 

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(in thousands)

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Net income

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$

192,678

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$

38,373

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Noncontrolling interest

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(1,493)

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(290)

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Net income attributable to ARLP

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$

191,185

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$

38,083

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General and administrative

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21,085

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18,622

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Depreciation, depletion and amortization

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65,550

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64,140

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Interest expense, net

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9,886

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9,627

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Income tax expense

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4,241

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42,715

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Consolidated Segment Adjusted EBITDA

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$

291,947

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$

173,187

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(5)Capital Expenditure shown excludes the $72.3 million paid for the JC Resources Acquisition and $2.8 million paid towards the Acquisition Agreement entered into on January 27, 2023 (See Note 2 – Acquisitions).