Market Overview

Alliance Resource Partners, L.P. Reports Increased Coal Sales Volumes, Revenues, Net Income Attributable to ARLP and EBITDA; Raises Quarterly Cash Distribution to $0.52 Per Unit; and Increases Guidance

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Alliance Resource Partners, L.P. (NASDAQ:ARLP) today reported financial
and operating results for the quarter ended June 30, 2018 (the "2018
Quarter"). Strong coal sales volumes in the 2018 Quarter led total
revenues higher to $516.1 million, an increase of 29.4% compared to the
quarter ended June 30, 2017 (the "2017 Quarter"). Net income
attributable to ARLP also increased in the 2018 Quarter compared to the
2017 Quarter, climbing 36.3% to $86.2 million. Net income attributable
to ARLP per basic and diluted limited partner unit was $0.64 for the
2018 Quarter compared to $0.82 for the 2017 Quarter as higher net income
was offset by the impacts of increased common units outstanding
resulting from completion of the Simplification Transactions discussed
below and the Exchange Transaction discussed in our July 28, 2017 press
release. EBITDA also increased 26.7% in the 2018 Quarter to $168.5
million compared to $132.9 million in the 2017 Quarter. (For a
definition of EBITDA and related reconciliations to comparable GAAP
financial measures, please see the end of this release. For actual and
pro forma earnings per basic and diluted limited partner unit reflecting
the Simplification and Exchange Transactions as if the transactions had
occurred on January 1, 2017, please see the end of this release.)

As previously announced on July 27, 2018, the Board of Directors of
ARLP's general partner (the "Board") increased the cash distribution to
unitholders for the 2018 Quarter to $0.52 per unit (an annualized rate
of $2.08 per unit), payable on August 14, 2018 to all unitholders of
record as of the close of trading on August 7, 2018. The announced
distribution represents a 4.0% increase over the cash distribution of
$0.50 per unit for the 2017 Quarter and a 1.0% increase over the cash
distribution of $0.515 per unit for the quarter ended March 31, 2018
(the "Sequential Quarter").

The Simplification Transactions previously announced by ARLP and
Alliance Holdings GP, L.P. ("AHGP") were completed on May 31, 2018.
Pursuant to the transactions, AHGP became a wholly owned subsidiary of
ARLP and all of the ARLP common units held by AHGP and its subsidiaries
were distributed to the unitholders of AHGP in exchange for their AHGP
common units. ARLP also issued 1,322,388 ARLP common units in exchange
for a 1.0001% general partner interest in Alliance Resource Operating
Partners, L.P. and a 0.001% managing membership interest in Alliance
Coal, LLC. As a result of the Simplification Transactions, all of the
outstanding AHGP common units were canceled and ceased to be publicly
traded on the Nasdaq Global Select Market.

"ARLP delivered strong financial and operating results for the 2018
Quarter," said Joseph W. Craft III, President and Chief Executive
Officer. "Coal sales volumes increased significantly as we shipped
substantially all of the 1.4 million tons impacted by weather-related
transportation disruptions during the Sequential Quarter. U.S. coal
market conditions remained favorable in the 2018 Quarter allowing us to
secure new commitments for approximately 8.9 million tons to be
delivered to domestic customers through 2021. We also continued to
strengthen our international coal sales position, booking an additional
4.6 million tons for delivery to the export markets over the next 12 to
18 months. ARLP is now essentially sold out for its planned 2018 sales
volumes and has increased its anticipated export sales for this year to
approximately 11.1 million tons. Our operations have also performed
well, increasing production volumes compared to the 2017 Quarter to meet
additional demand while continuing to control per ton costs. With solid
performance through the first half of 2018 and a positive outlook for
our markets over the balance of the year, ARLP is again increasing
full-year 2018 guidance for revenues, net income and EBITDA."

Mr. Craft added, "ARLP also continued to execute on its strategic
objectives during the 2018 Quarter. Concluding a process that began with
the Exchange Transaction in July 2017, ARLP completed the simplification
of its organizational structure in May, creating a single, larger
publicly traded entity with increased market float and liquidity and
improved investor transparency. ARLP also continued its efforts to
invest in our businesses for long-term cash flow growth. In response to
growing international thermal coal demand, we brought the first
continuous mining unit back into operation at our Gibson North mine
during the 2018 Quarter and currently anticipate the second unit will
commence production by the fourth quarter of this year. ARLP also
remained focused on returning cash to unitholders, first by the Board
again electing to increase distributions to unitholders and, second, by
executing on the unit repurchase program recently authorized by the
Board."

Consolidated Financial Results

Three Months Ended June 30, 2018 Compared to Three Months Ended June
30, 2017

Coal sales volumes of 10.5 million tons were 23.9% higher than the 2017
Quarter, primarily reflecting fulfillments in the 2018 Quarter of
shipments delayed during the Sequential Quarter due to weather-related
transportation disruptions, as well as increased export volumes.
Production volumes increased 2.6% compared to the 2017 Quarter to 9.7
million tons, primarily due to increased production at our Gibson South
and River View mines and the resumption of operations at our Gibson
North mine in the 2018 Quarter. ARLP's coal sales prices were also
slightly higher in the 2018 Quarter, increasing to $45.38 per ton sold,
compared to $45.15 per ton sold in the 2017 Quarter.

Compared to the 2017 Quarter, operating expenses increased 30.8% to
$311.2 million, primarily as a result of increased coal sales volumes.
Compared to the 2017 Quarter, Segment Adjusted EBITDA Expense per ton
increased 5.6% to $29.73 primarily as a result of difficult mining
conditions encountered at several Illinois Basin mines and our Tunnel
Ridge mine in Appalachia. (For a definition of Segment Adjusted EBITDA
Expense per ton and related reconciliation to comparable GAAP financial
measures, please see the end of this release.)

Depreciation, depletion and amortization increased 22.2% to $72.2
million in the 2018 Quarter primarily due to increased coal sales
volumes mentioned above. Our investments in oil and gas minerals and gas
compression services contributed income of $8.7 million in the 2018
Quarter, an increase of $5.8 million compared to the 2017 Quarter,
primarily due to distributions from ARLP's preferred equity interest in
gas compression services, which investment was made during the third
quarter of 2017. Comparative results between the 2018 and 2017 Quarters
were also impacted by an $8.1 million debt extinguishment loss related
to ARLP's early repayment of its Series B Senior Notes in May 2017.

Six Months Ended June 30, 2018 Compared to Six Months Ended June 30,
2017

Net income attributable to ARLP increased $74.0 million to $242.1
million for the six months ended June 30, 2018 (the "2018 Period"),
compared to $168.1 million for the six months ended June 30, 2017 (the
"2017 Period"). The increase was due to higher revenues and investment
income, a net gain on settlement of litigation and a debt extinguishment
loss in the 2017 Period, partially offset by higher operating expenses
and depreciation, depletion and amortization.

Total revenues increased by 13.2% to $973.3 million for the 2018 Period
compared to the 2017 Period due primarily to increased coal sales
volumes as discussed above. For the 2018 Period, strong sales
performances at the Gibson South, River View and Warrior mines drove
total coal sales volumes up 10.0% to 19.9 million tons compared to the
2017 Period. Production volumes increased 2.6% to 20.2 million tons in
the 2018 Period reflecting increased volumes at our Gibson South and
River View mines.

Increased coal sales volumes in the 2018 Period also led operating
expenses higher to $588.4 million, an increase of 17.7% compared to the
2017 Period. Segment Adjusted EBITDA Expense per ton also increased 7.5%
to $29.73 due to the previously mentioned difficult mining conditions
encountered in the 2018 Period. Compared to the 2017 Period,
depreciation, depletion and amortization increased 7.9% to $134.0
million in the 2018 Period as a result of the previously discussed
increase in coal sales volumes.

On March 9, 2018, ARLP finalized an agreement with a customer and
certain of its affiliates to settle litigation we initiated in 2015. The
agreement provided for a $93.0 million cash payment to ARLP, future
conditional coal supply commitments, continued export trans-loading
capacity for our Appalachian mines and the rights to acquire certain
coal reserves near our Tunnel Ridge operation. A settlement gain of
$80.0 million was recorded in the 2018 Period reflecting the cash
payment received net of certain costs associated with the gain.

Distributions of additional preferred interests received from our
investment in gas compression services contributed $7.6 million of
investment income to the 2018 Period. Comparative results between the
2018 and 2017 Periods were also impacted by the $8.1 million debt
extinguishment loss incurred related to ARLP's early repayment of its
Series B Senior Notes in May 2017.

                     

Regional Results and Analysis

 
% Change
2018 Second 2017 Second Quarter / 2018 First % Change
(in millions, except per ton data) Quarter Quarter Quarter Quarter Sequential
 

Illinois Basin

Tons sold 7.820 6.098 28.2 % 7.008 11.6 %
Coal sales price per ton (1) $ 39.70 $ 39.92 (0.6 )% $ 39.39 0.8 %
Segment Adjusted EBITDA Expense per ton (2) $ 25.69 $ 24.65 4.2 % $ 25.94 (1.0 )%
Segment Adjusted EBITDA (2) $ 109.6 $ 93.3 17.5 % $ 94.8 15.6 %
 

Appalachia

Tons sold 2.666 2.368 12.6 % 2.390 11.5 %
Coal sales price per ton (1) $ 61.10 $ 56.42 8.3 % $ 60.79 0.5 %
Segment Adjusted EBITDA Expense per ton (2) $ 38.84 $ 35.31 10.0 % $ 38.70 0.4 %
Segment Adjusted EBITDA (2) $ 60.1 $ 50.7 18.5 % $ 53.6 12.1 %
 

Total (3)

Tons sold 10.488 8.466 23.9 % 9.398 11.6 %
Coal sales price per ton (1) $ 45.38 $ 45.15 0.5 % $ 45.07 0.7 %
Segment Adjusted EBITDA Expense per ton (2) $ 29.73 $ 28.15 5.6 % $ 29.74 %
Segment Adjusted EBITDA (2) $ 185.5 $ 156.0 18.9 % $ 165.3 12.2 %

_________________

(1)   Sales price per ton is defined as total coal sales divided by total
tons sold.
(2) For definitions of Segment Adjusted EBITDA Expense per ton and
Segment Adjusted EBITDA and related reconciliations to comparable
GAAP financial measures, please see the end of this release.
(3) Total reflects consolidated results, which include other and
corporate and eliminations in addition to the Illinois Basin and
Appalachia segments highlighted above.
 

Total tons sold in the 2018 Quarter rose 23.9% and 11.6% compared to the
2017 and Sequential Quarters, respectively, due to the previously
discussed fulfillments of shipments delayed during the Sequential
Quarter due to weather-related transportation disruptions, as well as
increased export volumes. In the Illinois Basin, increased coal sales
volumes across all operations within the region drove tons sold higher
by 28.2% to 7.8 million tons in the 2018 Quarter compared to the 2017
Quarter. Sequentially, improved sales at our Gibson South, River View
and Hamilton mines and the resumption of operations at our previously
idled Gibson North mine in the 2018 Quarter increased coal sales volumes
by 11.6% in the Illinois Basin. In Appalachia, coal sales volumes
increased 12.6% and 11.5% compared to the 2017 and Sequential Quarters,
respectively, primarily due to increased sales volumes from our Mettiki
and Tunnel Ridge mines. ARLP ended the 2018 Quarter with total coal
inventory of 1.1 million tons, a reduction of approximately 1.5 million
tons and 0.8 million tons compared to the end of the 2017 and Sequential
Quarters, respectively.

Coal sales price realizations increased 8.3% per ton sold in Appalachia
in the 2018 Quarter compared to the 2017 Quarter, primarily due to
increased export sales of metallurgical coal at our Mettiki mine and
improved prices at our MC Mining mine.

Total Segment Adjusted EBITDA Expense per ton increased 5.6% compared to
the 2017 Quarter as a result of higher expenses per ton in both the
Illinois Basin and Appalachian regions. In the Illinois Basin, Segment
Adjusted EBITDA Expense per ton increased 4.2% compared to the 2017
Quarter primarily due to the previously mentioned difficult mining
conditions, particularly at our Dotiki mine, as well as increased roof
support and contract labor costs per ton across the region. Segment
Adjusted EBITDA Expense per ton in Appalachia increased 10.0% compared
to the 2017 Quarter reflecting difficult mining conditions encountered
just prior to a longwall move in April 2018 at our Tunnel Ridge mine as
well as higher labor, maintenance and selling expenses, partially offset
by improved recoveries at our Mettiki mine in the 2018 Quarter. Compared
to the Sequential Quarter, Segment Adjusted EBITDA Expense per ton
decreased 1.0% in the Illinois Basin resulting primarily from an
increased sales mix of lower-cost coal production from our Gibson South,
Hamilton and River View mines in the 2018 Quarter.

Market Update and Outlook

"U.S. coal markets have benefitted from increased economic activity in
2018 and recent favorable weather patterns across the Midwest and
Eastern part of the country," said Mr. Craft. "As a result, domestic
coal demand has been better than expected and utilities in ARLP's coal
markets have experienced a significant draw on inventories. With
year-over-year coal stockpiles down approximately 15.0% based on days of
burn, we anticipate domestic customers will be in the market seeking to
replenish stockpiles in the near term and to fill open positions for
2019 and beyond. Global coal supply/demand fundamentals in the seaborne
thermal markets continue to create significant strategic opportunities
for ARLP. Through the first six months of the year, ARLP has booked 10.4
million and 3.1 million tons for delivery in 2018 and 2019,
respectively, into the growing international thermal coal market. The
metallurgical export markets also remain attractive and we now plan to
export approximately 725,000 tons of metallurgical coal in 2018. Our
participation in the international coal markets has increased
significantly, from approximately 4.5% of total sales volumes in 2016 to
approximately 27.2% of anticipated sales at the midpoint of our current
2018 guidance. Looking ahead, global coal market dynamics remain
constructive and supportive of ARLP's long-term participation in these
increasingly strategic markets. We continue to believe that ARLP's
focused strategy of growing sustainable, long-term cash flows and
returning cash to unitholders while maintaining a conservative balance
sheet and strong distribution coverage should allow us to create value
for our unitholders in the future."

ARLP is maintaining its existing guidance ranges for 2018 coal
production of 40.0 million to 41.0 million tons and coal sales of 40.3
million to 41.3 million tons, essentially all of which is priced and
committed. ARLP has also secured volume and price commitments for
approximately 24.7 million tons, 16.0 million tons and 6.7 million tons
in 2019, 2020 and 2021, respectively, some of which is subject to
customer requirements.

Based on results to date and expectations for the balance of the year,
ARLP is increasing its guidance ranges for 2018 full-year revenues
(excluding transportation revenues) to $1.88 billion to $1.92 billion,
net income to $430.0 million to $450.0 million and EBITDA to $740.0
million to $760.0 million. These 2018 estimates for net income and
EBITDA include the $80.0 million settlement gain recorded in the
Sequential Quarter and reflect an increase in the expected contribution
related to our investments in oil and gas minerals and gas compression
services to a range of approximately $35.0 million to $40.0 million.

ARLP is also updating per ton estimates for 2018 compared to 2017. For
the full-year 2018, at the midpoint of current guidance, we anticipate
coal sales price per ton to be approximately 1.0% higher, Segment
Adjusted EBITDA Expense per ton to be 1.5% higher and Segment Adjusted
EBITDA per ton to be slightly higher, each compared to our full-year
results in 2017.

ARLP is also increasing its previous 2018 guidance for capital
expenditures to a range of $225.0 million to $255.0 million. We continue
to anticipate full-year 2018 investments related to the acquisition of
oil and gas mineral interests and gas compression services of
approximately $30.0 million. (For a definition of EBITDA, Segment
Adjusted EBITDA Expense per ton and Segment Adjusted EBITDA per ton and
related reconciliations to the most comparable GAAP financial measure,
please see the end of this release.)

A conference call regarding ARLP's 2018 Quarter financial results is
scheduled for today at 10:00 a.m. Eastern. To participate in the
conference call, dial (877) 506-1589 and request to be connected to the
Alliance Resource Partners, L.P. earnings conference call. Canadian
callers should dial (855) 669-9657 and all other International callers
should dial (412) 317-5240 and request to be connected to the same call.
Investors may also listen to the call via the "investor information"
section of ARLP's website at http://www.arlp.com.

An audio replay of the conference call will be available for
approximately one week. To access the audio replay, dial US Toll Free
(877) 344-7529; International Toll (412) 317-0088; Canada Toll Free
(855) 669-9658 and request to be connected to replay access code
10121817.

About Alliance Resource Partners, L.P.

ARLP is a diversified producer and marketer of coal to major United
States and international utilities and industrial users. ARLP, the
nation's first publicly traded master limited partnership involved in
the production and marketing of coal, is currently the second largest
coal producer in the eastern United States with mining operations in the
Illinois Basin and Appalachian coal producing regions.

ARLP currently operates eight mining complexes in Illinois, Indiana,
Kentucky, Maryland and West Virginia as well as a coal loading terminal
on the Ohio River at Mount Vernon, Indiana. ARLP also generates income
from a variety of other sources, including investments in oil and gas
mineral interests and gas compression services.

News, unit prices and additional information about ARLP, including
filings with the Securities and Exchange Commission ("SEC"), are
available at http://www.arlp.com.
For more information, contact the investor relations department of ARLP
at (918) 295-7674 or via e-mail at investorrelations@arlp.com.

The statements and projections used throughout this release are based on
current expectations. These statements and projections are
forward-looking, and actual results may differ materially. These
projections do not include the potential impact of any mergers,
acquisitions or other business combinations that may occur after the
date of this release. We have included more information below regarding
business risks that could affect our results.

FORWARD-LOOKING STATEMENTS: With the exception of historical
matters, any matters discussed in this press release are forward-looking
statements that involve risks and uncertainties that could cause actual
results to differ materially from projected results.
These risks,
uncertainties and contingencies include, but are not limited to, the
following: changes in coal prices, which could affect our operating
results and cash flows; changes in competition in coal markets and our
ability to respond to such changes; legislation, regulations, and court
decisions and interpretations thereof, including those relating to the
environment and the release of greenhouse gases, mining, miner health
and safety and health care; deregulation of the electric utility
industry or the effects of any adverse change in the coal industry,
electric utility industry, or general economic conditions; risks
associated with the expansion of our operations and properties;
dependence on significant customer contracts, including renewing
existing contracts upon expiration; adjustments made in price, volume or
terms to existing coal supply agreements; changing global economic
conditions or in industries in which our customers operate; liquidity
constraints, including those resulting from any future unavailability of
financing; customer bankruptcies, cancellations or breaches to existing
contracts, or other failures to perform; customer delays, failure to
take coal under contracts or defaults in making payments; fluctuations
in coal demand, prices and availability; changes in oil and gas prices,
which could affect our investments in oil and gas mineral interests and
gas compression services; our productivity levels and margins earned on
our coal sales; the coal industry's share of electricity generation,
including as a result of environmental concerns related to coal mining
and combustion and the cost and perceived benefits of other sources of
electricity, such as natural gas, nuclear energy and renewable fuels;
changes in raw material costs; changes in the availability of skilled
labor; our ability to maintain satisfactory relations with our
employees; increases in labor costs including costs of health insurance
and taxes resulting from the Affordable Care Act, adverse changes in
work rules, or cash payments or projections associated with post-mine
reclamation and workers' compensation claims; increases in
transportation costs and risk of transportation delays or interruptions;
operational interruptions due to geologic, permitting, labor,
weather-related or other factors; risks associated with major
mine-related accidents, such as mine fires, or interruptions; results of
litigation, including claims not yet asserted; difficulty maintaining
our surety bonds for mine reclamation as well as workers' compensation
and black lung benefits; difficulty in making accurate assumptions and
projections regarding post-mine reclamation as well as pension, black
lung benefits and other post-retirement benefit liabilities;
uncertainties in estimating and replacing our coal reserves; a loss or
reduction of benefits from certain tax deductions and credits;
difficulty obtaining commercial property insurance, and risks associated
with our participation (excluding any applicable deductible) in the
commercial insurance property program; and difficulty in making accurate
assumptions and projections regarding future revenues and costs
associated with equity investments in companies we do not control.

Additional information concerning these and other factors can be
found in ARLP's public periodic filings with the SEC, including ARLP's
Annual Report on Form 10-K for the year ended December 31, 2017, filed
on February 23, 2018 and ARLP's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2018, filed on May 7, 2018 with the SEC.
Except
as required by applicable securities laws, ARLP does not intend to
update its forward-looking statements.

                 
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OPERATING DATA
(In thousands, except unit and per unit data)
(Unaudited)
 
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
 
Tons Sold 10,488 8,466 19,886 18,076
Tons Produced 9,714 9,472 20,196 19,690
 
SALES AND OPERATING REVENUES:
Coal sales $ 475,925 $ 382,262 $ 899,535 $ 821,006
Transportation revenues 27,532 7,328 47,317 16,924
Other sales and operating revenues   12,680     9,130     26,407     21,870  
Total revenues   516,137     398,720     973,259     859,800  
 
EXPENSES:
Operating expenses (excluding depreciation, depletion and
amortization)
311,201 237,904 588,439 499,931
Transportation expenses 27,532 7,328 47,317 16,924
Outside coal purchases 68 1,442
General and administrative 17,026 14,944 33,677 30,977
Depreciation, depletion and amortization 72,150 59,020 133,998 124,147
Settlement gain           (80,000 )    
Total operating expenses   427,977     319,196     724,873     671,979  
 
INCOME FROM OPERATIONS 88,160 79,524 248,386 187,821
 
Interest expense, net (9,955 ) (10,615 ) (20,813 ) (18,131 )
Interest income 24 54 89 78
Equity method investment income 4,839 2,916 8,575 6,616
Equity securities income 3,854 7,578
Debt extinguishment loss (8,148 ) (8,148 )
Other (expense) income   (542 )   (375 )   (1,389 )   158  
INCOME BEFORE INCOME TAXES 86,380 63,356 242,426 168,394
 
INCOME TAX EXPENSE (BENEFIT)   3     4     (7 )   (8 )
 
NET INCOME 86,377 63,352 242,433 168,402
 
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST   (187 )   (122 )   (335 )   (270 )
 
NET INCOME ATTRIBUTABLE TO ALLIANCE RESOURCE PARTNERS, L.P. ("NET
INCOME OF ARLP")
$ 86,190   $ 63,230   $ 242,098   $ 168,132  
 
GENERAL PARTNERS' INTEREST IN NET INCOME OF ARLP $   $ 604   $ 1,560   $ 20,750  
 
LIMITED PARTNERS' INTEREST IN NET INCOME OF ARLP $ 86,190   $ 62,626   $ 240,538   $ 147,382  
 
BASIC AND DILUTED NET INCOME OF ARLP PER LIMITED PARTNER UNIT $ 0.64   $ 0.82   $ 1.80   $ 1.93  
 
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT $ 0.5150   $ 0.4375   $ 1.0250   $ 0.8750  
 
WEIGHTED-AVERAGE NUMBER OF UNITS OUTSTANDING – BASIC AND DILUTED   131,279,910     74,597,036     131,050,836     74,550,426  
 
         
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except unit data)
(Unaudited)
 
June 30, December 31,
2018 2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 51,225 $ 6,756
Trade receivables 178,675 181,671
Other receivables 443 146
Due from affiliates 19 165
Inventories, net 68,411 60,275
Advance royalties, net 1,510 4,510
Prepaid expenses and other assets   15,908     28,117  
Total current assets 316,191 281,640
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 3,013,346 2,934,188
Less accumulated depreciation, depletion and amortization   (1,547,224 )   (1,457,532 )
Total property, plant and equipment, net 1,466,122 1,476,656
OTHER ASSETS:
Advance royalties, net 50,903 39,660
Equity method investments 158,370 147,964
Equity securities 113,976 106,398
Goodwill 136,399 136,399
Other long-term assets   23,873     30,654  
Total other assets   483,521     461,075  
TOTAL ASSETS $ 2,265,834   $ 2,219,371  
 
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 89,698 $ 96,958
Due to affiliates 717 771
Accrued taxes other than income taxes 20,574 20,336
Accrued payroll and related expenses 40,935 35,751
Accrued interest 4,999 5,005
Workers' compensation and pneumoconiosis benefits 10,766 10,729
Current capital lease obligations 30,954 28,613
Other current liabilities 15,756 19,071
Current maturities, long-term debt, net   61,500     72,400  
Total current liabilities 275,899 289,634
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities, net 387,470 415,937
Pneumoconiosis benefits 72,896 71,875
Accrued pension benefit 41,774 45,317
Workers' compensation 45,159 46,694
Asset retirement obligations 126,790 126,750
Long-term capital lease obligations 40,744 57,091
Other liabilities   19,671     14,587  
Total long-term liabilities   734,504     778,251  
Total liabilities   1,010,403     1,067,885  
 
PARTNERS' CAPITAL:
Alliance Resource Partners, L.P. ("ARLP") Partners' Capital:
Limited Partners - Common Unitholders 131,395,987 and 130,704,217
units outstanding, respectively
1,300,011 1,183,219
General Partner's interest 14,859
Accumulated other comprehensive loss   (49,907 )   (51,940 )
Total ARLP Partners' Capital 1,250,104 1,146,138
Noncontrolling interest   5,327     5,348  
Total Partners' Capital   1,255,431     1,151,486  
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 2,265,834   $ 2,219,371  
 
         
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Six Months Ended
June 30,
2018 2017
 
CASH FLOWS FROM OPERATING ACTIVITIES $ 373,244   $ 294,478  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures (120,646 ) (67,517 )
Increase in accounts payable and accrued liabilities 2,376 2,411
Proceeds from sale of property, plant and equipment 477 540
Contributions to equity method investments (11,400 ) (12,587 )
Distributions received from investments in excess of cumulative
earnings
  1,191     1,829  
Net cash used in investing activities   (128,002 )   (75,324 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under securitization facility 112,600 75,700
Payments under securitization facility (123,500 ) (100,000 )
Payments on term loan (50,000 )
Borrowings under revolving credit facilities 70,000 40,000
Payments under revolving credit facilities (100,000 ) (295,000 )
Borrowings under long-term debt 400,000
Payment on long-term debt (145,000 )
Payments on capital lease obligations (14,952 ) (13,389 )
Payment of debt issuance costs (15,033 )
Payment for debt extinguishment (8,148 )
Payment for purchase of units under unit repurchase program (7,639 )
Contributions to consolidated company from affiliate noncontrolling
interest
251
Net settlement of withholding taxes on issuance of units in deferred
compensation plans
(2,081 ) (2,988 )
Cash contributions by General Partners 41 905
Cash contribution by affiliated entity 2,142
Cash obtained in Simplification Transactions 1,139
Distributions paid to Partners (137,443 ) (106,440 )
Other   (1,080 )   (337 )
Net cash used in financing activities   (200,773 )   (219,479 )
 
NET CHANGE IN CASH AND CASH EQUIVALENTS 44,469 (325 )
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,756 39,782
   
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 51,225   $ 39,457  
 

Reconciliation of GAAP "net income attributable
to ARLP" and "net income" to non-GAAP "EBITDA," "Adjusted EBITDA" and
"Distributable Cash Flow" (in thousands).

EBITDA is defined as net income (prior to the allocation of
noncontrolling interest) before net interest expense, income taxes and
depreciation, depletion and amortization and Adjusted EBITDA is EBITDA
modified for certain items that may not reflect the trend of future
results, such as settlement gains and debt extinguishment losses.
Distributable cash flow ("DCF") is defined as Adjusted EBITDA excluding
interest expense (before capitalized interest), interest income, income
taxes and estimated maintenance capital expenditures. Distribution
coverage ratio ("DCR") is defined as DCF divided by distributions paid
to partners.

Management believes that the presentation of such additional financial
measures provides useful information to investors regarding our
performance and results of operations because these measures, when used
in conjunction with related GAAP financial measures, (i) provide
additional information about our core operating performance and ability
to generate and distribute cash flow, (ii) provide investors with the
financial analytical framework upon which management bases financial,
operational, compensation and planning decisions and (iii) present
measurements that investors, rating agencies and debt holders have
indicated are useful in assessing us and our results of operations.

EBITDA, Adjusted EBITDA, DCF and DCR should not be considered as
alternatives to net income attributable to ARLP, net income, income from
operations, cash flows from operating activities or any other measure of
financial performance presented in accordance with GAAP. EBITDA,
Adjusted EBITDA and DCF are not intended to represent cash flow and do
not represent the measure of cash available for distribution. Our method
of computing EBITDA, Adjusted EBITDA, DCF and DCR may not be the same
method used to compute similar measures reported by other companies, or
EBITDA, Adjusted EBITDA, DCF and DCR may be computed differently by us
in different contexts (i.e. public reporting versus computation under
financing agreements).

                         
Three Months Ended Six Months Ended Three Months Ended Year Ended
June 30, June 30, March 31, December 31,
2018 2017 2018 2017 2018 2018E Midpoint
 
Net income attributable to ARLP $ 86,190 $ 63,230 $ 242,098 $ 168,132 $ 155,908 $ 440,000
Net income attributable to noncontrolling interests   187     122     335     270     148     830  
Net income 86,377 63,352 242,433 168,402 156,056 440,830
Depreciation, depletion and amortization 72,150 59,020 133,998 124,147 61,848 270,200
Interest expense, net 10,227 10,727 21,285 18,300 11,058 40,200
Capitalized interest (296 ) (166 ) (561 ) (247 ) (265 ) (1,270 )
Income tax expense (benefit)   3     4     (7 )   (8 )   (10 )   40  
EBITDA 168,461 132,937 397,148 310,594 228,687 750,000
Settlement gain (80,000 ) (80,000 ) (80,000 )
Debt extinguishment loss       8,148         8,148          
Adjusted EBITDA 168,461 141,085 317,148 318,742 148,687 670,000
Interest expense, net (10,227 ) (10,727 ) (21,285 ) (18,300 ) (11,058 ) (40,200 )
Income tax (expense) benefit (3 ) (4 ) 7 8 10 (40 )
Estimated maintenance capital expenditures (1)   (45,850 )   (40,256 )   (95,325 )   (83,683 )   (49,475 )   (191,300 )
Distributable Cash Flow $ 112,381   $ 90,098   $ 200,545   $ 216,767   $ 88,164   $ 438,460  
Distributions paid to partners $ 69,047   $ 53,216   $ 137,443   $ 106,440   $ 68,396   $ 276,700  
Distribution Coverage Ratio   1.63     1.69     1.46     2.04     1.29     1.58  

_________________

(1)   Our maintenance capital expenditures, as defined under the terms of
our partnership agreement, are those capital expenditures required
to maintain, over the long-term, the operating capacity of our
capital assets. We estimate maintenance capital expenditures on an
annual basis based upon a five-year planning horizon. For the 2018
planning horizon, average annual estimated maintenance capital
expenditures are assumed to be $4.72 per ton produced compared to
the estimated $4.25 per ton produced in 2017. Our actual maintenance
capital expenditures fluctuate depending on various factors,
including maintenance schedules and timing of capital projects,
among others. We annually disclose our actual maintenance capital
expenditures in our Form 10-K filed with the SEC.
 

Reconciliation of GAAP "Operating Expenses" to
non-GAAP "Segment Adjusted EBITDA Expense per ton" and Reconciliation of
non-GAAP "Adjusted EBITDA" to "Segment Adjusted EBITDA" and "Segment
Adjusted EBITDA per ton" (in thousands, except per ton data).

Segment Adjusted EBITDA Expense per ton includes operating expenses,
coal purchases and other income divided by tons sold. Transportation
expenses are excluded as these expenses are passed through to our
customers and, consequently, we do not realize any margin on
transportation revenues. Segment Adjusted EBITDA Expense is used as a
supplemental financial measure by our management to assess the operating
performance of our segments. Segment Adjusted EBITDA Expense is a key
component of EBITDA and Adjusted EBITDA in addition to coal sales and
other sales and operating revenues. The exclusion of corporate general
and administrative expenses from Segment Adjusted EBITDA Expense allows
management to focus solely on the evaluation of segment operating
performance as it primarily relates to our operating expenses.

                     
Three Months Ended Six Months Ended Three Months Ended
June 30, June 30, March 31,
2018 2017 2018 2017 2018
 
Operating expense (1) $ 311,201 $ 237,904 $ 588,439 $ 499,931 $ 277,238
Outside coal purchases 68 1,442 1,374
Other expense (income) (1)   542   375   1,389   (158 )   847
Segment Adjusted EBITDA Expense $ 311,811 $ 238,279 $ 591,270 $ 499,773 $ 279,459
Divided by tons sold   10,488   8,466   19,886   18,076     9,398
Segment Adjusted EBITDA Expense per ton $ 29.73 $ 28.15 $ 29.73 $ 27.65   $ 29.74

_________________

(1)   Operating expenses and other expense (income) for the 2017 Quarter
and 2017 Period have been recast to reflect the reclass of the
non-service components of net benefit cost previously included in
operating expense now being presented within other expense (income)
in accordance with new generally accepted accounting principles
effective in 2018.
 

Segment Adjusted EBITDA per ton is defined as net income (prior to the
allocation of noncontrolling interest) before net interest expense,
income taxes, depreciation, depletion and amortization, general and
administrative expenses, settlement gain and debt extinguishment loss
divided by tons sold. Segment Adjusted EBITDA removes the impact of
general and administrative expenses from Adjusted EBITDA (discussed
above) to allow management to focus solely on the evaluation of segment
operating performance.

                     
Three Months Ended Six Months Ended Three Months Ended
June 30, June 30, March 31,
2018 2017 2018 2017 2018
 
Adjusted EBITDA (See reconciliation to GAAP above) $ 168,461 $ 141,085 $ 317,148 $ 318,742 $ 148,687
General and administrative   17,026   14,944   33,677   30,977   16,651
Segment Adjusted EBITDA $ 185,487 $ 156,029 $ 350,825 $ 349,719 $ 165,338
Divided by tons sold   10,488   8,466   19,886   18,076   9,398
Segment Adjusted EBITDA per ton $ 17.69 $ 18.43 $ 17.64 $ 19.35 $ 17.59
 

Actual basic and diluted earnings per limited
partner unit and pro forma earnings per basic and diluted limited
partner unit.

Below is the actual basic and diluted earnings per limited partner unit
as well as pro forma basic and diluted earnings per limited partner unit
for the three and six months ended June 30, 2018 and 2017, as if the
Simplification and Exchange Transactions had occurred on January 1,
2017. For a detailed reconciliation of actual and pro forma net income
of ARLP to actual and pro forma basic and diluted earnings per limited
partner unit, please see our Form 10-Q for the quarter ended June 30,
2018 expected to be filed on or about August 6, 2018.

                 
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017

Actual

(in thousands, except per unit data)
Net income of ARLP available to limited partners $ 84,586 $ 61,523 $ 236,108 $ 143,956
Weighted-average limited partner units outstanding – basic and
diluted
  131,280   74,597   131,051   74,550

Basic and diluted net income of ARLP per limited partner unit

$ 0.64 $ 0.82 $ 1.80 $ 1.93

Pro forma

Pro forma net income of ARLP available to limited partners $ 83,913 $ 61,647 $ 236,426 $ 164,393
Pro forma weighted-average limited partner units outstanding – basic
and diluted
  132,166   132,048   132,164   132,001
Pro forma basic and diluted net income of ARLP per limited partner
unit
$ 0.63 $ 0.47 $ 1.79 $ 1.25

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