Alliance Resource Partners, L.p. · NASDAQ:ARLP
Alliance Resource Partners, L.p — MLP Investor Conference 2006
26 slides from Alliance Resource Partners, L.p's conference presentation, Mar 9, 2006
Slide 1: MLP Investor Conference
Exhibit 99.2 MLP Investor Conference March 9, 2006
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 factu
Slide 3: Alliance Resource Partners Overview
Alliance Resource Partners Overview ARLP General Information ARLP is the nation’s only publicly traded master limited partnership involved in the production and marketing of coal ARLP produces a wide variety of steam coals from eight mining complexes located throughout the major eastern U.S. coal fi
Slide 4: Focused on Primary Business Objective
Alliance Resource Partners, L.P. Focused on Primary Business Objective – Create sustainable, capital efficient growth in distributable cash flow to maximize growth in distributions to ARLP unitholders 4 2006 MLP Investor Conference
Slide 5: Diversified Operations
Diversified Operations Diversified producer and marketer of coal to major U.S. utilities and industrial users 2005 production of 22.3 million tons ranked ARLP as the fifth(a) largest eastern coal producer and eleventh (b) in the U.S. Currently controls approximately 549.0 million tons of proven and
Slide 6: Efficient Operations
Efficient Operations By maximizing existing assets ARLP has consistently delivered sector leading EBITDA margins 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Alliance Foundation Consol Peabody Massey Arch Alpha 2003 2004 2005 Source: Citigroup EBITDA margin represents EBITDA / Total Revenues. EBITDA is a
Slide 7: Consistent Cash Flows
Consistent Cash Flows ARLP’s product and geographic diversity provides strong and stable cash flow $193.6 $200.0 $180.0 $160.0 $145.1 $140.0 $110.3 $120.0 $101.3 $100.0 $70.5 $80.0 $60.0 $40.0 $20.0 $0.0 2001 2002 2003 2004 2005 7 2006 MLP Investor Conference
Slide 8: Exceptional Long-Term Performance
Exceptional Long-Term Performance Five Consecutive Years of Record Results - Production Revenues EBITDA Net Income 8 2006 MLP Investor Conference
Slide 9: Solid Production Growth
Solid Production Growth Production increased more than 9% in 2005 and is expected to grow more than 9% in 2006 With identified growth projects, ARLP is targeting annual production of up to 38 million tons by 2010 24.5 25.0 22.3 20.4 19.2 20.0 18.0 15.0 10.0 5.0 0.0 2002 2003 2004 2005 2006E 9 2006 M
Slide 10: Strong Revenue Growth
Strong Revenue Growth Revenues have grown at a 17% CAGR since 2002 Future revenue growth potential enhanced by meaningful exposure to market pricing $910.0 - $1,000 $930.0 $900 Coal Sales Volumes Open to Market Pricing $799.6 As of March 1, 2006 $800 Tons of Coal Year (MM) $700 $623.5 2006 1.65 $600
Slide 11: Strong EBITDA Growth
Strong EBITDA Growth EBITDA has grown at a 31% CAGR since 2002 and is expected to increase by up to 15% in 2006 $300 $245.0 - $265.0 $250 $230.1 $200 $147.9 $150 $119.0 $102.5 $100 $50 2002 2003 2004 2005 2006E EBITDA is a non-GAAP measuredefined as income before net interest expense, income taxes a
Slide 12: Consistent Net Income Growth
Consistent Net Income Growth Net Income has grown at a 76% CAGR since 2002 and is expected to increase by up to 13% in 2006 $160.0 - $180.0 $180 $160.0 $160 $140 $120 $100 $76.6 $80 $47.9 $60 $34.8 $40 $20 $0 2002 2003 2004 2005 2006E 12 2006 MLP Investor Conference
Slide 13: Solid Financial Position
Solid Financial Position Significant financial capacity available for growth ($ in thousands) 2004YE 2005YE Cash and Securities $ 80,574 $ 81,296 EBITDA $ 147,889 $ 230,145 Interest Expense $ 14,963 $ 11,816 Senior Notes $ 180,000 $ 162,000 $85MM Credit Facilitiy - - Total Debt $ 180,000 $ 162,000 T
Slide 14: With Strong Distribution Growth…
With Strong Distribution Growth… Distributions to unitholders increased 24% in 2005 and 84% since the beginning of 2002 Compared to MLP Composite average annual distribution growth rate of 6%(a) $0.50 $0.45 $0.40 $0.35 $0.30 $0.25 $0.20 2002 2003 2004 2005 (a) Source: Citigroup Investment Research 1
Slide 15: …And Industry-Leading Distribution Coverage
... And Industry-Leading Distribution Coverage ARLP’s distribution coverage ratio of greater than 2.0x is the highest in the MLP universe 3.00 2.75 2.74 2.50 2.25 2.16 2.00 1.83 1.75 1.50 1.25 1.18 1.14 1.15 1.13 1.23 1.19 1.07 1.06 1.00 0.94 0.75 0.50 0.25 0.00 Alliance Pipeline Propane Others Comp
Slide 16: ARLP has Delivered Superior Total Returns
ARLP has Delivered Superior Total Returns Indexed Total Total Returns Since 1/1/2003 Return (%) 400 ARLP 350 Coal MLP Index (a) (b) Pipeline MLP Comps 300 S&P 500 +271.6% 250 +223.2% 200 150 100 +78.2% 50 +46.6% 0 -50 1/1/2003 6/15/2003 11/27/2003 5/10/2004 10/22/2004 4/5/2005 9/17/2005 3/1/2006 ___
Slide 17: …and Remains Attractively Valued
…and Remains Attractively Valued (1) EV/2006E EBITDA 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Peabody Arch Consol Massey Alliance Foundation Alpha Peabody Arch Consol Massey Alliance Foundation Alpha (1) EV represents Enterprise Value which reflectsMarket Capitalization plus Debt. Average EBITDA estimates
Slide 18: Favorable Coal Fundamentals
Favorable Coal Fundamentals Growing Domestic Demand for Coal U.S. Coal Inventories (a) Continued U. S. economic strength 140.0 Electric power demand near all-time high and 130 130.0 127 126 expected to grow ~ 2% annually through 2030 123 (a) 120.0 118 Energy Policy Act of 2005 favors coal as fuel 11
Slide 19: Significant High-Sulfur Market Dynamics
Significant High-Sulfur Market Dynamics Current and pending legislation has caused utilities to announce or plan to add scrubbers which should lead to additional market opportunities for the Illinois Basin and Northern Appalachian regions As utilities execute their environmental compliance initiativ
Slide 20: Impact of Scrubber Installations
Impact of Scrubber Installations As scrubber installations are completed – Emphasis on sulfur content will diminish and coal purchasing decisions will be based on lowest delivered cost per MMBtu Transportation costs will play major role in determining ultimate amount of coal switching in the future
Slide 21: ARLP Recent Positioning in Scrubber Markets
ARLP Recent Positioning in Scrubber Markets Recent coal sales agreement have solidified ARLP’s presence in the scrubber markets Allegheny Coal Sales Agreement • New 10 year, 20 million ton coal supply agreement commencing with initial production from Penn Ridge mine currently estimated in 2009 - 201
Slide 22: ARLP Future Positioning in Scrubber Markets
ARLP Future Positioning in Scrubber Markets ARLP has a number of significant, near-term development opportunities which could be financed with internally generated cash flow Tunnel Penn Gibson Elk Development Project: Ridge Ridge South Creek Permitting in Inititating permitting Permitting in Complet
Slide 23: ARLP Investment Highlights
ARLP Investment Highlights Diversified asset base with operations in all major eastern U. S. coal fields producing a wide variety of steam coals Proven track record of financial and operating performance and growth Demonstrated market performance Highest distribution coverage ratio in the MLP sector
Slide 24: Questions and Answers
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Slide 25: EBITDA Reconciliation
EBITDA Reconciliation ($ in thousands) Year Ended December 31, 2006E 2002 2003 2004 2005 Midpoint Cash flows provided by operating activities $ 101,306 $ 110,312 $ 145,055 $ 193,618 $ 250,000 Reclamation and mine closing (1,365) (1,341) (1,622) (1,918) (1,800) Coal inventory adjustment to market (48
Slide 26: MLP Investor Conference
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