Alliance Resource Partners, L.p. · NASDAQ:ARLP
Alliance Resource Partners, L.p — Wachovia Securities Nantucket Equity Conference 2006
31 slides from Alliance Resource Partners, L.p's conference presentation, Jun 22, 2006
Slide 1: Wachovia Securities Nantucket Equity Conference
* Exhibit 99.2 * * * * * Wachovia Securities Nantucket Equity Conference June 22, 2006
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements and information that are based on the beliefs of Alliance Resource Partners, L.P. and Alliance Holdings GP, L.P. (the “Partnerships”) and those of their respective general partners (the “General Partners”), as well as a
Slide 3: Alliance Overview
Alliance Overview A\ Avuance Resource A ALLIANCE y_ (N PARTNERS. LP. y (NN HOLDINGS GP. LP.
Slide 4: Ownership of Alliance Partnerships
Ownership of Alliance Partnerships 80.0% 20.0% L.P. Alliance Holdings L.P. Management / Interest GP , L.P. Interest Public Others (NASDAQ: AHGP) Unitholders 59.9 million units outstanding 1.98% General IDRs 42.3% L.P. Partner Interest (a) Interest Alliance Resource Partners, L.P. Public (NASDAQ: ARL
Slide 5: Alliance Partnership Profiles
Alliance Partnership Profiles NASDAQ Symbol: ARLP AHGP Unit Price (6/12/06): $35.06 $22.31 Distribution: $1.84 $0.74 Total Distribution Coverage: 2.17x 1.00x Equity Market Cap: $2,067 mm $1,335 mm Enterprise Value: $2,197 mm $1,335 mm Net Debt / Net Book Cap: 29.4% 0.0% Net Debt / Ent. Value: 5.9% 0
Slide 6: Complementary Business Objectives
Complementary Business Objectives Alliance Resource Partners, L.P. Create sustainable, capital efficient growth in distributable cash flow to maximize growth in distributions to ARLP unitholders Alliance Holdings GP, L.P. Increase cash distributions to unitholders by actively assisting ARLP in imple
Slide 7: Alliance Investment Highlights
Alliance Investment Highlights Strong operational and financial attributes of Alliance Resource Partners, L.P. Established history of operating and financial performance Efficient, low-cost operator Proven track record of executing growth strategy Robust industry fundamentals Meaningful upside throu
Slide 8: Alliance Resource Partners, L.P. Overview
Alliance Resource Partners, L.P. Overview
Slide 9: Alliance Resource Partners, L.P. Snapshot
Alliance Resource Partners, L.P. Snapshot ARLP is a diversified producer and marketer of coal to major U.S. utilities and industrial users Fifth largest eastern coal producer and eleventh largest in the U.S.(a) Only publicly-traded master limited partnership involved in the production and marketing
Slide 10: Operations Summary
Operations Summary 2005 Production 2005 Summary (MM Tons) Northern Production Reserves Primary Customers Appalachia Illinois Basin 15% Dotiki 4.7 89.5 Seminole; LG&E; TVA Central Warrior 4.1 17.8 Synfuel Solutions Appalachia Pattiki 2.6 47.6 TVA; Tampa Electric 15% Illinois Basin Hopkins 0.9 64.3 LG
Slide 11: Efficient Operator
Efficient Operator ARLP is a low-cost, efficient coal operator, delivering 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: Public filings EBITDA margin represents EBITDA / Total Reven
Slide 12: Consistent Track Record of Growth at ARLP
Consistent Track Record of Growth at ARLP Production Revenue 25.0 $1,000.0 24.4 $920.0 $800.0 22.3 $799.6 20.0 20.4 $600.0 19.2 $623.5 18.0 $523.2 $499.0 $400.0 15.0 CAGR: 7.9% $200.0 CAGR: 16.5% 10.0 $0.0 (a) (a) 2002 2003 2004 2005 2006E 2002 2003 2004 2005 2006E EBITDA Cash Flow from Operations $
Slide 13: Continuous Unit Distribution Growth
Continuous Unit Distribution Growth ARLP has increased its quarterly distribution by 84% over the last four years $1.95 $1.84 $1.84 (a) $1.75 $1.65 $1.65 $1.55 $1.50 $1.50 $1.35 $1.30 $1.30 $1.25 $1.13 $1.15 $1.05 $1.05 $1.05 $1.05 $1.00 $1.00 $0.95 $0.75 __________________ (a) On 4/24/06, ARLP mana
Slide 14: Leader in Distribution Growth
Leader in Distribution Growth ARLP compares favorably to the broad MLP universe in terms of distribution growth since the beginning of 2004 (a) 81% 64% 41% 40% 36% 36% 35% 34% 30% 26% 19% 19% 18% 16% 16% 13% 10% 5% 2% 0% __________________ (a) Total distribution growth from distribution paid in the
Slide 15: Benefits of Industry-Leading Distribution Coverage
Benefits of Industry-Leading Distribution Coverage ARLP’s coverage ratio is among the highest of publicly traded limited partnerships in the energy sector (a) Benefits to Alliance investors include: Greater potential for future distribution growth Capital efficient financing for ARLP organic growth
Slide 16: Superior Total Returns to Unitholders
Superior Total Returns to Unitholders Indexed Total Total Returns Since 1/1/2003 Return (%) 400 ARLP 350 Coal MLP Index (a) Pipeline MLP Index (b) 300 S&P 500 250 +253.1% 200 CAGR: 44.2% +202.5% 150 100 +85.8% 50 +40.5% 0 -50 1/1/2003 6/29/2003 12/26/2003 6/23/2004 12/19/2004 6/17/2005 12/14/2005 6/
Slide 17: Alliance Holdings GP, L.P. Overview
Alliance Holdings GP, L.P. Overview
Slide 18: AHGP Leverage to ARLP Growth
AHGP Leverage to ARLP Growth Incentive distribution rights provide AHGP unitholders with significant financial leverage to ARLP distribution growth $80,000 Current ARLP $70,000 Distribution ($45.8 million) IDRs $60,000 $50,000 G.P. $40,000 Interest $30,000 $20,000 Hypothetical L.P. Distributions to
Slide 19: Impact of ARLP Distribution Growth
Impact of ARLP Distribution Growth AHGP Leverage to ARLP Distribution Growth 32.6% 30% 25.5% 20% 17.9% 10% 9.5% 0% 0% 5% 10% 15% 20% __________________ ARLP Distribution Growth Note: Assumes constant 36.4 million common units outstanding at ARLP. 14
Slide 20: Value Inherent in Underlying Cash Flows
Value Inherent in Underlying Cash Flows ARLP’s value proposition becomes clear through its current cash available for distribution The impact is even more pronounced at AHGP due to the IDR leverage Implied Distributions Across Coverage Levels (a) Implied Yields (b) $3.50 $3.19 10.00% 9.11% Current A
Slide 21: Positioned for Continued Growth
Positioned for Continued Growth
Slide 22: Robust Coal Sector Industry Fundamentals
Robust Coal Sector Industry Fundamentals Growing Domestic Demand for Coal U.S. Coal Inventories (a) Continued U.S. economic strength 140 Electric power demand near all-time high and expected to grow ~2.0% annually through 2030(a) 130 127 126 123 Energy Policy Act of 2005 favors coal as fuel of the 1
Slide 23: ARLP Positioned to Benefit from Sector Growth
ARLP Positioned to Benefit from Sector Growth Future revenue growth potential enhanced by meaningful exposure to market pricing Coal Sales / Ton Sold $40.00 $38.53 $36.01 Coal Sales Volumes Open to $30.00 $33.65 Market Pricing (a) $28.79 $25.77 Tons of $20.00 Year Coal (mm) 2006 1.4 CAGR: 10.6% 2007
Slide 24: Significant Scrubber Market Dynamics
Significant Scrubber Market Dynamics Current and pending legislation has caused utilities to add or announce plans to add scrubbers which management expects should lead to additional market opportunities for the Illinois Basin and Northern Appalachian regions As utilities execute their environmental
Slide 25: ARLP Well Positioned in Scrubber Markets
ARLP Well Positioned in Scrubber Markets Current Position Recent Contract Agreements Current Mine Developments Four mining complexes Allegheny Coal Sales Agreement Elk Creek currently producing in the • New 10 year, 20 million ton Mountain View Illinois Basin and one in coal supply agreement Van Lea
Slide 26: Large Inventory of Organic Growth Projects
Large Inventory of Organic Growth Projects ARLP has a number of significant, near-term development opportunities Tunnel Penn Gibson River Development Project: Ridge Ridge South View Permitting in Initiating Permitting in Initiating Status: progress permitting process progress permitting process Expe
Slide 27: Summary
A ALLIANCE RESOURCE A ALLIANCE ae Pp Mm is PARTAIERE 1 smAice oD
Slide 28: Alliance Investment Highlights
Alliance Investment Highlights Strong operational and financial attributes of Alliance Resource Partners, L.P. Established history of operating and financial performance Efficient, low-cost operator Proven track record of executing growth strategy Robust industry fundamentals Meaningful upside throu
Slide 29: Questions and Answers
Questions and : Answers A ALLIANCE RESOURCE A ALLIANCE ce PAPTNIERCE 1 P Me ums mare Opa
Slide 30: ARLP EBITDA Reconciliation
ARLP EBITDA Reconciliation ($ 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 marke
Slide 31: Wachovia Securities Nantucket Equity Conference
* * * * * * Wachovia Securities Nantucket Equity Conference June 22, 2006
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