SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2022

SEGMENT INFORMATION

SEGMENT INFORMATION

25.SEGMENT INFORMATION

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.  

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.

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.

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 14 – Investments) and Cavalier Minerals.  

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.

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 14 – Investments), Wildcat Insurance, which assists the ARLP Partnership with its insurance requirements, AROP Funding and Alliance Finance (both discussed in Note 8 – 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.

Reportable segment results are presented below.

	Coal Operations				Royalties				Other,
	Illinois								Corporate and
	Basin		Appalachia		Oil & Gas		Coal		Elimination		Consolidated
	(in thousands)
Year Ended December 31, 2022
Revenues - Outside	$	1,296,305	$	928,087	$	141,441	$	56	$	40,622	$	2,406,511
Revenues - Intercompany		—		—		—		60,624		(60,624)		—
Total revenues (1)		1,296,305		928,087		141,441		60,680		(20,002)		2,406,511
Segment Adjusted EBITDA Expense (2)		806,080		464,029		13,950		21,871		(23,497)		1,282,433
Segment Adjusted EBITDA (3)		420,684		426,402		131,168		38,809		3,495		1,020,558
Total assets		779,018		431,913		711,917		321,587		417,038		2,661,473
Capital expenditures (4)		158,624		76,603		—		38,276		12,891		286,394
Year Ended December 31, 2021
Revenues - Outside	$	919,597	$	545,539	$	77,185	$	69	$	27,586	$	1,569,976
Revenues - Intercompany		—		—		—		51,402		(51,402)		—
Total revenues (1)		919,597		545,539		77,185		51,471		(23,816)		1,569,976
Segment Adjusted EBITDA Expense (2)		613,303		344,332		9,943		18,269		(33,198)		952,649
Segment Adjusted EBITDA (3)		265,292		172,601		68,774		33,202		9,383		549,252
Total assets		676,091		420,144		630,627		285,943		146,601		2,159,406
Capital expenditures (4)		60,166		47,577		—		45		15,196		122,984
Year Ended December 31, 2020
Revenues - Outside	$	769,957	$	500,330	$	43,141	$	105	$	14,596	$	1,328,129
Revenues - Intercompany		—		—		—		42,112		(42,112)		—
Total revenues (1)		769,957		500,330		43,141		42,217		(27,516)		1,328,129
Segment Adjusted EBITDA Expense (2)		543,264		320,656		4,106		18,249		(25,026)		861,249
Segment Adjusted EBITDA (3)		213,876		171,362		39,773		23,968		(2,490)		446,489
Total assets		738,315		440,815		613,916		288,525		84,445		2,166,016
Capital expenditures		48,636		70,960		—		12		1,493		121,101

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

(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.  

The following is a reconciliation of Operating expenses (excluding depreciation, depletion and amortization), the most comparable GAAP financial measure, to consolidated Segment Adjusted EBITDA Expense:

	Year Ended December 31,
	2022		2021		2020
	(in thousands)
Operating expenses (excluding depreciation, depletion and amortization)	$	1,286,635	$	943,257	$	859,656
Outside coal purchases		151		6,372		—
Other expense (income)		(4,353)		3,020		1,593
Segment Adjusted EBITDA Expense	$	1,282,433	$	952,649	$	861,249

(3) Segment Adjusted EBITDA is defined as net income (loss) attributable to ARLP before net interest expense, income taxes, depreciation, depletion and amortization, general and administrative expense, asset and goodwill impairments and acquisition gain. 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. Net income (loss), the most comparable GAAP financial measure, is reconciled to consolidated Segment Adjusted EBITDA:

	Year Ended December 31,
	2022		2021		2020
	(in thousands)
Net income (loss)	$	579,148	$	178,755	$	(129,051)
Noncontrolling interest		(1,958)		(598)		(169)
Net income (loss) attributable to ARLP	$	577,190	$	178,157	$	(129,220)
General and administrative		80,334		70,160		59,806
Depreciation, depletion and amortization		273,759		261,377		313,387
Asset impairments		—		—		24,977
Goodwill impairment		—		—		132,026
Interest expense, net		35,297		39,141		45,478
Income tax expense		53,978		417		35
Consolidated Segment Adjusted EBITDA	$	1,020,558	$	549,252	$	446,489

.

(4) Capital Expenditures shown exclude the Belvedere Acquisition on September 9, 2022, Jase Acquisition on October 26, 2022 and the Boulders Acquisition on October 13, 2021. (Note 3 – Acquisitions).