Alliance Resource Partners, L.P. · NASDAQ:ARLP
Alliance Resource Partners, L.P — MLP Investor Conference 2007
33 slides from Alliance Resource Partners, L.P's conference presentation, Mar 7, 2007
Slide 1: Alliance Resource Partners, L.P. Alliance Holdings GP, L.P.
Exhibit 99.1 # Alliance Resource Partners, L.P. Alliance Holdings GP, L.P. MLP Investor Conference March 7, 2007
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: Alliance Resource Partners, L.P.
Alliance Resource Partners, L.P. Diversified producer and marketer of coal to major U.S. utilities and industrial users Only publicly-traded master limited partnership involved in the production and marketing of coal Began mining operations in 1971 Currently operate eight underground mining complexe
Slide 5: Two Ways to Invest in Alliance Partnerships
Two Ways to Invest in Alliance Partnerships 80.0% 20.0% L.P. Alliance Holdings L.P. Management / Interest GP , L.P. Interest Public Others (a) (NASDAQ: AHGP) Unitholders 59.9 million units outstanding 1.98% General IDRs 42.1% L.P. Partner Interest (b) Interest Alliance Resource Partners, L.P. Public
Slide 6: Alliance Partnership Profiles
Alliance Partnership Profiles NASDAQ Symbol: ARLP AHGP Unit Price (3/1/07): $35.45 $23.31 Distribution: $2.16 $1.00 Total Unit Coverage: 1.76x 1.00x Equity Market Cap: $1,296 mm $1,395 mm Enterprise Value: $1,389 mm $1,395 mm Net Debt / Book Cap: 26.0% 0.0% Net Debt / Enterprise Value: 6.7% 0.0% th
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 Favorable long-term industry fundamentals Experience
Slide 8: 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 Maximize existing asset base – expand / extend current operations, continuous focus on productivity impro
Slide 9: Alliance Resource Partners, L.P. Overview
Alliance Resource Partners, L.P. Overview
Slide 10: Alliance Resource Partners, L.P. Snapshot
Alliance Resource Partners, L.P. Snapshot ARLP operates eight underground mining complexes in all major eastern coal producing regions 12 Diversified reserve position in the Illinois Basin, Central Appalachia and Northern Appalachia regions 6 Significant organic development projects identified in th
Slide 11: Operations Summary
Operations Summary 2006 Production 2006 Summary (MM Tons) Northern Production Reserves Primary Customers Appalachia Illinois Basin 14% Dotiki 4.7 86.7 Seminole; TVA Central Warrior 4.5 13.9 Synfuel Solutions; LG&E Appalachia Pattiki 2.5 44.4 Corn Products; LG&E 15% Hopkins 1.6 63.5 Tampa Electric; T
Slide 12: 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 Consol Arch Foundation Peabody Alpha Massey 2003 2004 2005 2006 __________________ Source: Public filings EBITDA margin represents EBITDA / Total
Slide 13: Focused on Safety
Focused on Safety ARLP’s safety performance has been consistently better than our industry peer group Innovative use of technology to improve safety State-of-the-art Leaky Feeder mine communication systems installed at all operations Fiber optic based mine monitoring systems installed at all operati
Slide 14: Consistent Track Record of Growth at ARLP
Consistent Track Record of Growth at ARLP Production Revenue 25.0 $1,000.0 25.0 $1,000.0 23.7 $920.0 $800.0 22.3 $799.6 20.0 20.4 $600.0 19.2 $623.5 $523.2 $400.0 15.0 CAGR: 6.8% CAGR: 17.6% $200.0 10.0 $0.0 (a) (a) 2003 2004 2005 2006 2007E 2003 2004 2005 2006 2007E EBITDA Cash Flow from Operations
Slide 15: Continuous Unit Distribution Growth
Continuous Unit Distribution Growth ARLP has increased its quarterly distribution by 106% over the last four years $2.25 $2.16 $2.00 $2.00 $2.00 $1.84 $1.84 $1.75 $1.65 $1.65 $1.50 $1.50 $1.50 $1.30 $1.30 $1.25 $1.25 $1.13 $1.05 $1.05 $1.05 $1.05 $1.00 $0.75 11
Slide 16: 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) 136% 92% 56% 54% 49% 49% 48% 45% 42% 38% 26% 23% 22% 22% 21% 18% 9% 2% 0% __________________ (a) Total distribution growth from distribution paid in the fir
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 Current ARLP $100,000 ARLP Distribution Distribution at AHGP IPO ($2.16 per unit) $80,000 ($1.84 per unit) $60,000 IDRs G.P. $40,000 Interest Hypothetic
Slide 19: Impact of ARLP Distribution Growth
Impact of ARLP Distribution Growth AHGP Leverage to ARLP Distribution Growth 40% 36.0% 30% 27.0% 20% 18.0% 10% 9.0% 0% 0% 5% 10% 15% 20% __________________ ARLP Distribution Growth Note: Potential one year ARLP distribution growth over current annualized distribution level of $2.16 and assuming 36.6
Slide 20: 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 AHGP investors include: Greater potential for future distribution growth Capital efficient financing for ARLP organic growth proj
Slide 21: Value Inherent in Underlying Cash Flows
Value Inherent in Underlying Cash Flows Implied Yields (a) ARLP’s value proposition becomes 12.00% 10.70% clear through its current 10.50% 9.44% cash available for 9.00% distribution 7.50% 6.09% 6.77% 5.78% 6.02% 6.84% 6.00% 5.50% The impact is even more 4.50% 4.41% 3.93% pronounced at Alliance 3.00
Slide 22: Positioned for Continued Growth
Positioned for Continued Growth
Slide 23: Current Market Conditions Expected to Improve
Current Market Conditions Expected to Improve Recent Soft Spot Market Prices have been influenced by: Generally mild weather Higher than normal utility stockpiles Short term increase in coal production in 2006 2007 Outlook EIA projects 60 million ton swing in 2007 coal demand/production as demand is
Slide 24: Robust Long-Term Coal Industry Fundamentals
Robust Long-Term Coal Industry Fundamentals Growing Domestic Coal Demand Strong U.S. economy New coal-fired power plants expected to result in 120 MTPY of additional coal demand by 2010(a) Btu conversion technologies could more than double U.S. coal demand by 2030(b) Constrained Domestic Coal Supply
Slide 25: ARLP has Benefited through its Diversity
ARLP has Benefited through its Diversity Coal Sales / Ton Sold ARLP’s results have been enhanced by its strategy of $40.00 diversifying: $38.42 $36.79 $33.65 $30.00 Markets served $28.79 $25.77 Customer mix $20.00 Contracting philosophy CAGR: 10.5% $10.00 $0.00 2003 2004 2005(a) 2006 2007E _________
Slide 26: ARLP Is Positioned for Future Sector Growth
ARLP Is Positioned for Future Sector Growth Future growth potential for scrubber market bodes well for Alliance high sulfur operations Projected Eastern U.S. Million Tons (a) Installed Scrubber Capacity 12,500 Btu equivalent Gigawatts (b) 450 180 400 160 350 140 300 120 250 100 200 80 150 60 100 40
Slide 27: ARLP Well Positioned in Scrubber Markets
ARLP Well Positioned in Scrubber Markets Approximately 597 million tons of “scrubber” quality coal Northern Appalachia Strong reserve base of ~164 million tons of high and medium sulfur coal Currently accounts for ~13% of total ARLP coal production Illinois Basin Second largest producer in the basin
Slide 28: Large Inventory of Organic Growth Projects
Large Inventory of Organic Growth Projects Tunnel Ridge Penn Ridge Permitting in progress Initiating permitting process Estimated capital cost ~ $195 - $210 million Estimated capital cost ~ $165 - $175 million Estimated reserves ~ 70 million tons high sulfur coal Estimated reserves ~ 57 million tons
Slide 29: Summary
A ALLIANCE RESOURCE A ALLIANCE ae Pp Mm is PARTAIERE 1 smAice oD
Slide 30: 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 Favorable long-term industry fundamentals Experience
Slide 31: Appendix
A\ Avuance Resource A ALLIANCE y_ (N PARTNERS. LP. y (NN HOLDINGS GP. LP.
Slide 32: ARLP EBITDA Reconciliation
ARLP EBITDA Reconciliation 2007E 2003 2004 2005 2006 Mid-point Cash flow provided by operating activities $ 110,312 $ 145,055 $ 193,618 $ 250,923 $ 253,400 Reclamation and mine closing (1,341) (1,622) (1,918) (2,101) (2,200) Coal inventory adjustment to market (687) (488) (573) (319) - Other 353 (25
Slide 33: Alliance Resource Partners, L.P. Alliance Holdings GP, L.P.
Alliance Resource Partners, L.P. Alliance Holdings GP, L.P. MLP Investor Conference March 7, 2007
Alliance Resource Partners — MLP Investor Conference 2007 on 6ix