Alliance Resource Partners, L.p. · NASDAQ:ARLP
Alliance Resource Partners, L.p — MLP Investor Conference 2005
31 slides from Alliance Resource Partners, L.p's conference presentation, Mar 1, 2005
Slide 1: MLP Investor Conference March 1, 2005
MLP Investor Conference March 1, 2005
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Statements in this presentation which are not statements of historical fact are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current factua
Slide 3: Alliance Resource Partners, L.P.
Alliance Resource Partners, L.P. 3 2005 MLP Investor Conference
Slide 4: Focused On Primary Objective
Focused On Primary Objective Sustainable, capital efficient growth in distributable cash flow that will enable growth in distributions to ARLP unitholders 4 2005 MLP Investor Conference
Slide 5: ARLP Investment Highlights
ARLP Investment Highlights Diversified asset base, both geographically and in types of coal produced Efficient, low cost operator Strong long-term market outlook for coal Proven track record of growth Attractive growth prospects looking forward Demonstrated market performance 5 2005 MLP Investor Con
Slide 6: Diversified & Efficient Operator
Diversified & Efficient Operator
Slide 7: Diversified Operations
Diversified Operations Market wide variety of steam coals primarily to investment grade electric utilities and industrial users Seventh largest eastern coal producer with operations in all major eastern U.S. coalfields Currently controls approximately 513 million tons of coal reserves GIBSON COUNTY
Slide 8: Consistent Cash Flows
Consistent Cash Flows ARLP’s product and geographic diversity provides strong and stable cash flow Cash Flow From Operations $MM $160.0 $140.0 $120.0 $100.0 $80.0 $60.0 $40.0 $20.0 $0.0 $71.4 $70.5 $101.3 $110.3 $145.1 2000 2001 2002 2003 2004
Slide 9: Ability to Leverage Market
Ability to Leverage Market ARLP’s contract positions and operating flexibility provide meaningful exposure to coal market upside Committed Sales Tons Historical as of Year End/Projected as of February 2005 MM Tons 28 24 20 16 12 8 4 0 2001 2002 2003 2004 2005E 2006E Uncommitted Tons / Uncommitted Pr
Slide 10: Efficient Operations
Efficient Operations ARLP’s focus on maximizing existing assets has consistently resulted in sector leading EBITDA margins… EBITDA Margins 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Alliance Peabody Consol Arch Massey 16.0% 22.6% 15.0% 15.4% 15.2% 14.0% 16.1% 18.6% 15.8% 15.3% Source: Company reports E
Slide 11: Coal Market Outlook
Coal Market Outlook
Slide 12: U.S. Coal Demand
U.S. Coal Demand Coal usage continues to grow with increasing need for electricity to support economic growth (million tons) 1,600 1,400 1,200 1,000 800 600 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 Source: EIA Annual Energy Outlook 2005 Reference Case
Slide 13: Favorable Coal Fundamentals
Favorable Coal Fundamentals Coal Pricing Environment Eastern Coal ($/Ton) Big Sandy Barge $70 $60 $50 $40 $30 $20 $10 $0 WEAK STRENGTHENING STRONG WEAK STRENGTHENING STRONG Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 $15 $12 $9 $6 $
Slide 14: Competing Fuels
Competing Fuels 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Capacity Factor Nuclear Capacity Factor Coal Capacity Factor Gas (CC) Natural Gas, $(mmbtu) $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 Natural Gas Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Note Coal & Gas data only available 1998 – 2004E
Slide 15: Proven Track Record of Growth
Proven Track Record of Growth
Slide 16: Four Consecutive Years of Record Results
Four Consecutive Years of Record Results Production Revenues EBITDA Net Income
Slide 17: Solid Production Growth
Solid Production Growth Production has grown at a 5% CAGR since 2001… ARLP is now the seventh largest coal producer in the eastern United States MM Tons Produced 17.4 18.0 19.2 20.4 21.7 22.5 2002 2003 2004 2005E 2006E
Slide 18: Strong Revenue Growth
Strong Revenue Growth Revenues have grown at an 11% CAGR since 2001… And are expected to increase by 18% to 19% in 2005 to a range of $735 – $745 million $750 $700 $650 $600 $550 $500 $450 $400 Revenues ($MM) Excluding Transportation Revenue $459.3 $499.9 $523.2 $623.5 $735.0 - $745.0 2001 2002 2003
Slide 19: Strong EBITDA Growth
Strong EBITDA Growth EBITDA has grown at a 25% CAGR since 2001… And is expected to increase by 26% to 33% in 2005 to a range of $187 – 197 million EBITDA is a non-GAAP measure defined as income before net interest expense, income taxes and depreciation, depletion and amortization. See Slide 31 for a
Slide 20: Consistent Net Income Growth
Consistent Net Income Growth Net Income has grown at a 67% CAGR since 2001… And is expected to increase by 31% to 44% in 2005 to a range of $100MM – $110MM Net Income ($ MM) $120 $100 $80 $60 $40 $20 $0 $16.5 $34.8 $47.9 $76.6 $100.0 - $110.0 2001 2002 2003 2004 2005E
Slide 21: Solid Financial Position
Solid Financial Position Significant capacity available for growth ($ in thousands) 2003YE 2004YE Cash and Securities $33,771 $80,574 Senior Notes $180,000 $180,000 $85MM Credit Facility - - Total Debt $180,000 $180,000 Total Capital $192,557 $235,187 Debt to Capital 93.50% 76.50% Market Capitalizat
Slide 22: ARLP Positioned for Growth
ARLP Positioned for Growth Elk Creek Mine Development Estimated 30 million tons of high sulfur Illinois Basin coal Estimated capital required - $65 million Construction in process; initial production expected in early 2006 Anticipated annual production capacity of 3.2 million tons Tunnel Ridge Reser
Slide 23: Ability to Leverage Market
Ability to Leverage Market ARLP’s contract positions and operating flexibility provide meaningful exposure to coal market upside Committed Sales Tons Historical as of Year End/Projected as of February 2005 28 24 20 16 MM Tons 12 4 0 2001 2002 2003 2004 2005E 2006E Uncommitted Tons / Uncommitted Pric
Slide 24: Demonstrated Market Performance
Demonstrated Market Performance
Slide 25: With Strong Distribution Growth…
With Strong Distribution Growth… Distributions to unitholders increased 33% in 2004 and 50% since the beginning of 2002 Quarterly Distributions per Unit $0.75 $0.70 $0.65 /Unit $0.60 $ $0.55 $0.50 $0.45 $0.40 $0.35 $0.30 2002 2003 2004
Slide 26: …ARLP Has Out Performed the MLP Sector and S&P
…ARLP Has Out Performed the MLP Sector and S&P 500 ARLP Relative Performance Indexed Total Return Since 2001 450% 400% 350% 300% 250% 200% 150% 100% 50% 0% 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 +413.5% +305.7% +80.3% ARLP MLP Composite S&P 500 Source: Smith Barney Equity Research MLP Composit
Slide 27: ARLP has Outperformed the C-Corp Coal Sector…
ARLP has Outperformed the C-Corp Coal Sector… ARLP Relative Performance Indexed Price Performance Since 2002 Indexed Price Performance (%) 50 100 150 200 250 300 +165.1% +120.5% 12/31/01 10/11/02 7/25/03 5/6/04 2/16/05 ARLP C-Corp Coal Companies (a) (a) Includes: ACI, CNX, MEE and BTU. Source: AG Ed
Slide 28: …and Remains Attractively Valued
…and Remains Attractively Valued EV/2005E EBITDA(1) 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 MEE BTU ARLP ACI CNX One Year Ago Today (2/22/05) (1) EV represents Enterprise Value which reflects Market Capitalization plus Debt. Average EBITDA estimates from Thompson One Analysis for all companies
Slide 29: Investment Highlights
| Investment Highlights
Slide 30: ARLP Investment Highlights
ARLP Investment Highlights Diversified asset base, both geographically and in types of coal produced Efficient, low cost operator Strong long-term market outlook for coal Proven track record of growth Attractive growth prospects looking forward Demonstrated market performance
Slide 31: EBITDA Reconciliation
EBITDA Reconciliation ($ in thousands) Year Ended December 31, 2005E 2001 2002 2003 2004 Midpoint Net Income $16,545 $34,785 $47,902 $76,621 $105,000 Depreciation, Depletion and Amortization 50,696 52,408 52,495 53,664 70,000 Net Interest Expense 16,772 16,360 15,981 14,963 14,400 Income Tax Expense
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