Q3 2023 Alliance Resource Partners LP Earnings Call

Hello, and welcome to the Alliance Resource Partners third quarter 2023 earnings conference call. If anyone should require operator assistance. Please press star zero on your telephone keypad, a question and answer session will follow the formal presentation. You may be placed in the question queue at any time by pressing star one on your telephone.

Keypad as a reminder, this conference is being recorded its now my pleasure to turn the call over to senior Vice President and CFO Cary Marshalls. Please go ahead Sir.

Thank you operator and welcome everyone earlier. This morning Alliance Resource partners released its third quarter 2023 financial and operating results and we will now discuss those results as well as our perspective on current market conditions and outlook for the balance of 2023.

Following our prepared remarks, we will open the call to answer your questions before beginning a reminder, that some of our remarks. Today may include forward looking statements subject to a variety of risks uncertainties and assumptions contained in our filings from time to time with the Securities and Exchange Commission.

Also reflected in this morning's press release.

While these forward looking statements are based on information currently available to us.

If one or more of these risks or uncertainties materialize or if our underlying assumptions prove incorrect actual results may vary materially from those we projected or expected.

In providing these remarks the partnership has no obligation to publicly update or revise any forward looking statement, whether as a result of new information future events or otherwise unless required by law to do so.

Finally, we will also be discussing certain non-GAAP financial measures definitions and reconciliations of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures are contained at the end of Arlp's press release, which has been posted on our website and furnished to the SEC.

Form 8-K.

With the required preliminaries out of the way I will begin with a review of our results for the third quarter, then turn the call over to Joe craft, Our chairman President and Chief Executive Officer for his comments.

Total revenues in the 2023 quarter increased slightly to $636 5 million compared to $632 5 million in the 2022 quarter.

Modest year over year improvement was driven primarily by higher transportation and other revenues, partially offset by lower oil and gas royalties.

Total coal sales price per ton rose to $64 94 per ton for the 2023 quarter, an increase of eight 3% versus the 2022 quarter and continues to reflect the positive impact of our contracted order book.

On a sequential basis coal sales price per ton was three 2% higher.

And our royalty segment total revenues were $53 $1 million down 9% year over year, but up six 2% sequentially.

Our results versus the prior year period reflect lower realized oil and gas commodity pricing that more than offset record oil and gas volumes and increases in coal royalty revenue per ton.

Specifically coal royalty revenue per ton was up 13, 5% compared to the 2022 quarter, while lower commodity prices led to oil and gas royalties average realized sales prices being down 31, 2% per barrel of oil equivalent versus that 2022 quarter.

Sequentially coal royalty revenue per ton was up three 7% and oil and gas royalties average sales prices were up two 1% per barrel of oil equivalent.

As it relates to volume co production decreased 7% to $8 4 million tonnes, while coal sales volumes decreased seven 9% to $8 5 million tons compared to the 2022 quarter.

Paired to the sequential quarter coal sales volumes decreased 5% due to lower sales volumes in our Appalachia segment.

Coal sales volumes in Appalachia were down 15, 2% compared to the sequential quarters.

Due to lock outages customer plant maintenance a reduction in operating shifts that are empty mining operation and challenging geologic conditions at our met Tiki longwall operation that is delayed development of a new longwall district.

Coal royalty tons sold declined 11, 8% year over year, while oil and gas royalty volumes increased 28, 2% on a barrel of oil equivalent basis year over year.

The increased volumes from oil and gas resulted from the acquisition of additional oil and gas mineral interest and increased drilling and completion activities on our acreage.

Turning to cost segment adjusted EBITDA expense per ton sold for our coal operations was $41 19 per ton an.

An increase of $13 eight and eight 8%, respectively versus the 2022 and sequential quarters.

Higher labor maintenance purchased coal and sales related expenses per ton, particularly in Appalachia, all contributed to the higher costs.

The Appalachian segment, adjusted EBITDA expense per ton increased by $11 <unk> per ton and $12 80 per ton, respectively compared to the 2022 and sequential quarters.

Of the total increases approximately $3 97 per ton and $5 91 per ton, respectively were attributable to med <unk>, which had the longwall idle during the full 2023 quarter.

The longwall at <unk> is expected to be back in production and the new Longwall district in late November.

Brokerage bought and sold at a profit in our Appalachia segment, some high cost coal during the 2023 quarter, which accounted for approximately $3 seven and $1 59 per ton of the increased expense compared to the 2022 and sequential quarters. The.

The balance of the Appalachia cost increase during the 2023 quarter was due to a 20% drop in production at RMC mining operation and adverse mining conditions and equipment availability at our tunnel Ridge mine, which resulted in several lost unit shifts during the 2023 quarter.

Our net income in 2023 was $153 7 million eight 4% lower as compared to the 2022 quarter. The decrease reflects lower coal sales volumes higher production expenses and lower realized prices in oil and gas royalties, partially offset by higher coal sales.

This per ton realizations and higher volumes in oil and gas royalties.

EBITDA for the quarter was $227 6 million down 10, 3% as compared to the prior year period.

Now turning to our balance sheet and uses of cash alliance generated 123 <unk>.

$7 million of free cash flow in the 2023 quarter.

Our total and net leverage ratios were 0.36, and 0.17 times, respectively total debt to trailing 12 months adjusted EBITDA.

Total liquidity was $629 5 million at quarter end, which included approximately $197 2 million of cash on the balance sheet.

During the 2023 quarter, we paid a quarterly distribution of <unk> 70 per unit equating to an annualized rate of $2 80 per unit.

This distribution level is unchanged sequentially and up 40% versus the prior year quarter.

Additionally, we reduced our outstanding senior notes balance by $54 6 million and completed two strategic new venture investments and ascend elements and infant item during the 2023 quarter totaling approximately $50 million.

Now turning to our updated guidance detailed in this morning's release, we have elected to slightly adjust our full year 2023 coal sales volumes and pricing, which will be highly dependent upon logistics during the fourth quarter.

We now anticipate Arlp's overall coal sales volumes in 2023 to be in the range of 34, 5% to 35 million tonnes.

Our committed tonnage for 2023 is 35 million tons of them.

Total $29 7 million is committed domestically and $5 3 million tons are committed to the export markets.

We are encouraged by improving coal export market fundamentals based on recent international benchmark pricing, we believe there could be some incremental sales opportunities in late 2023 in the export markets for.

For 2024, we currently have $27 3 million tons committed comprised of $25 7 million tonnes in the domestic markets and $1 6 million tons for the export markets.

As we look to 2024, we do believe there is opportunity in 2024 for us to ship more tons into the export markets in 2024 versus 2023 levels based on current export market fundamentals.

Sales pricing for the year is expected to be slightly lower than at the time of our last update we have chosen to modestly adjust our outlook for average coal price realizations for 2023 to a new range of $64 50 to $66 per ton from 65% to $66 per ton than previously communicated.

On the cost side, we have narrowed our full year 2023 segment adjusted EBITDA expense per ton to a new range of $39 15 to $40 50 per ton from the previous range of 38 to $41 per ton.

We have fourth quarter 2023, longwall moves scheduled at our Hamilton mine in the Illinois Basin and our tunnel Ridge operation in Appalachia, We do expect Appalachia segment, adjusted EBITDA expense per ton in the fourth quarter to be approximately 8% to 10% higher than 2023 quarter cost per ton while <unk>.

Illinois Basin fourth quarter cost per ton are anticipated to be in line with the 2023 quarter.

In our oil and gas segment, we are reiterating our guidance ranges for the full year and all of our other guidance items are unchanged.

And with that I will turn the call over to Joe for comments on the market and his outlook for ARLP.

No.

Thank you Carrie and good morning, everyone.

I want to begin my comments by thanking the entire alliance organization for their continued hard work and dedication.

I am proud of all that has been accomplished through the first three quarters of the year as we are on track to achieve another record year, beating last year's full year's revenue and net income numbers.

Our well contracted coal order book enabled us to navigate an otherwise challenging operating environment during the 2023 quarter.

Our coal segment achieved higher realized pricing per ton sold relative to both the 2022 and sequential quarters.

<unk> that continues to favorably impact year to date results.

<unk> with regards to EBITDA and net income.

However, we did face some difficult mining conditions in Appalachia at all three mines during the 2023 quarter.

Operator: Hello and welcome to the Alliance Resource Partners 3rd quarter 2023 earnings conference call. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question to at any time by pressing star 100 telephone keypad. As a reminder, this conference is being recorded.

Which resulted in higher operating cost and fewer tons produced versus previous expectations.

Mild weather experienced in the first half of the year combined with lower natural gas prices throughout the year have impacted coal consumption in 2023, preventing us from topping last year's record coal sales volumes.

Cary Marshall: It's not my pleasure to turn the clover to senior vice president and CFO, Cary Marshall. Please go ahead, sir. Thank you operator and welcome everyone. Earlier this morning, Alliance Resource Partners released its 3rd quarter 2023 financial and operating results and we will now discuss those results as well as our perspective on current market conditions and outlook for the balance of 2023. Following our prepared remarks, we will open the call to answer your questions.

As we look to next year, we have seen a recent increase in the natural gas forward curve as well as a jump in API two pricing.

Due in large part to the conflict in the Middle East.

And projected pricing levels.

We believe that our export potential in 2024 will improve markedly as compared to the back half of 2023.

Our oil and gas royalty segment reported continued growth in the 2023 quarter, resulting in record production volumes.

Cary Marshall: Before beginning, a reminder that some of our remarks today may include forward looking statements, subject to a variety of risks, uncertainties, and assumptions contained in our filings from time to time with the Securities and Exchange Commission and are also reflected in this morning's press release. While these forward looking statements are based on information currently available to us, if one or more of these risks are uncertainties materialized or if our underlying assumptions prove incorrect, actual results may vary materially from those we projected or expected.

Underscoring the success of recent acquisitions and core parts of the prolific Permian basin.

Although average realized pricing for BOE during the 2023 quarter was lower compared to near record levels and the 2022 quarter.

Our royalty portfolio is well positioned to provide significant cash flow via hedge free exposure to commodity pricing cost free organic growth.

We expect additional growth in production will lead to record production volumes in 2024, as we continue to invest in minerals.

Cary Marshall: In providing these remarks, the partnership has no obligation to publicly update or revise any forward looking statement whether as a result of new information, future events or otherwise, unless required by law to do so. Finally, we will also be discussing certain non-GAF financial measures. Definitions and reconciliations of the differences between these non-GAF financial measures and the most directly comparable GAF financial measures are contained at the end of ARL keys press release which has been posted on our website and furnished to the SEC on form 8K.

The strong cash flow generation of our underlying businesses positions us to continue improving our balance sheet and pursue the highest and best uses for our capital.

During the quarter, we paid a regular distributions repurchased and redeemed a portion of our outstanding senior notes and announced two exciting investments made by our new ventures group.

The first was a $25 million investment in ascend elements, which is a U S based manufacturer and recycler of sustainable engineered battery materials for Evs.

Cary Marshall: With the required preliminaries out of the way, I will begin with a review of our results for the third quarter, then turn the call over to Joe Kraft, our chairman, president and chief executive officer for his comments. Total revenues in the 2023 quarter increased slightly to 636.5 million compared to 632.5 million in the 2022 quarter. The modest year-over-year improvement was driven primarily by higher transportation and other revenues, partially offset by lower oil and gas royalties.

The investment was part of their $460 million series D funding round.

Which when combined with a $480 million D O E Grant.

We will help advance the construction of North America's first commercial scale manufacturing facility producing cathode materials for EV batteries located essentially in our backyard in Hopkinsville, Kentucky.

Beyond our initial contribution we plan to evaluate additional partnership opportunities with us and to expand our investment in the battery recycling industry and support the critical materials infrastructure needed to facilitate the onshoring of U S battery manufacturing.

Cary Marshall: Total coal sales price per ton rose to $64.94 per ton for the 2023 quarter, an increase of 8.3% versus the 2022 quarter and continues to reflect the positive impacts of our contracted order book. On a sequential basis, coal sales price per ton was 3.2% higher. In our royalty segment, total revenues were $53.1 million down 9% year-over-year, but up 6.2% sequentially. Our results versus the prior year period reflect lower realized oil and gas commodity pricing that more than offset record oil and gas volumes and increases in coal royalty revenue per ton, specifically, Colerolthi Revenue Breton was up 13.5% compared to the 2022 quarter, while lower commodity prices led to oil and gas royalties average realized sales prices, being down 31.2% per barrel of oil equivalent versus the 2022 quarter.

The second investment included in niche and additional $25 million in infant item, a Texas based developer and manufacturer of high efficiency Electric motors as part of their ongoing series E equity raise.

If you recall, we originally invested in <unk> in item in April 2022.

And with today's announcement, our total investment in infant item is now $67 million, making us a meaningful investor in the company.

We believe <unk> items patented air core motor technology has significant market potential in our technology Division matrix is actively exploring opportunities to collaborate with infant item and incorporate the technology into our current mining operations.

In closing I am proud of Arlp's performance year to date and encouraged by the opportunities in front of us.

Cary Marshall: Sequentially, Colerolthi Revenue Breton was up 3.7% and oil and gas royalties average sales prices were up 2.1% per barrel of oil equivalent. As it relates to volume, co-production decreased 7% to 8.4 million tons, while Colerolth sales volumes decreased 7.9% to 8.5 million tons compared to the 2022 quarter. Compared to the sequential quarter, Colerolth sales volumes decreased 5% due to lower sales volumes in our Appalachia segment. Colerolth sales volumes in Appalachia were down 15.2% compared to the sequential quarters due to lock outages, customer plant maintenance, a reduction in operating shifts that are MC mining operation, and challenging geologic conditions at our Metiki Long Wall operation that is delayed development of a new long-wall district.

We remain focused on finishing the year strong and gearing up for what should be another successful year in 2024.

That concludes our prepared comments and I'll now ask the operator to open the call for questions.

Operator.

Thank you, we'll now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

You May press star two if we'd like to move your question from the queue for participants using speaker equipment. It may be necessary to pick up a handset before pressing star one one moment. Please while we poll for questions.

Our first question is coming from Nathan Martin from Benchmark Company. Your line is now live.

Yeah.

Hey, Thanks, operator, good morning, Joe Kerry I appreciate you taking my questions.

Nick.

Maybe a quick clarification to start.

Cary you mentioned Apple last one cost per ton to be up 8% to 10% in the fourth quarter, just want to confirm that versus the three 223 results about $54 84, and then you also said a minute ago that IV cost, Illinois basin cost should be flat was that also with the third quarter 'twenty three.

Cary Marshall: Colerolthi tons sold declined 11.8% year-over-year, while only gas royalty volumes increased 28.2% on a barrel of oil equivalent basis year-over-year. The increased volumes from oil and gas resulted from the acquisition of additional oil and gas mineral interest and increased drilling and completion activities on our acreage. Turning to costs, segment-adjusted EBITDAI expense per ton sold for our coal operations was 41 dollars and 19 cents per ton. An increase of 13.8 and 8.8% respectively versus the 2022 and sequential quarters.

Yes, that's right.

Okay perfect. Thanks for that they're kind of moving on I think when we talk last quarter. Obviously, the expectation was the sales would outpace production in the second half drawdown inventories I think around half a million tons or so by the year end.

Unfortunately that didn't really work out here in the third quarter because some of the items you guys mentioned I think there's only about 100000 tongue draw.

Cary Marshall: Higher labor, maintenance, purchase coal, and sales-related expenses per ton, particularly in Appalachia all contributed to the higher cost. The Appalachia segment adjusted EBITDA expense per ton increased by $11.6 per ton and $12.80 per ton respectively compared to the 2022 and sequential quarters. Of the total increases approximately $3.97 per ton and $5.91 per ton respectively were attributable to Metiki which had the long-wall idle during the full 2023 quarter. The long-wall at Metiki is expected to be back in production in the new long-wall district in late November.

What do you need from a logistics standpoint kind of gets you to the high.

High or the low end of your revised full year guidance are there any are there any carryover effects from some of those two items you mentioned like the lock outages customer payments et cetera.

And so when you look at the sales range.

<unk>.

We show that our contracted position for 2023 is $35 million.

Thats, what we are targeting to ship in the.

For the full year.

There could be logistical impacts it could drop that to the 34 five.

The tons are sold whatever would not be delivered would be really primarily driven by making sure that we have the proper transportation.

Cary Marshall: Brocridge bought and sold at a profit in our Appalachia segment some high cost coal during the 2023 quarter which accounted for approximately $3.07 and $1.59 per ton of the increased expense compared to the 2022 and sequential quarters. The balance of the Appalachia cost increase during the 2023 quarter was due to a 20% drop in production at RMC mining operation and adverse mining conditions and equipment availability at our Tunnel Ridge mine which resulted in several lost unit shifts during the 2023 quarter.

And deliveries vessel loadings et cetera occurring during the fourth quarter whatever doesn't occur in the fourth quarter will rollover into 2025, so far.

Part of our mix when you get into sales price and you get into the volume.

It does try to focus on what will be.

The specific contracts that are being served and the particular years. So when you think in terms of the pricing, it's really not for from one quarter to the next I mean, the revenue is going to be basically the same it's just a timing issue.

Cary Marshall: R. Our net income in 2023 was 153.7 million, 8.4% lower as compared to the 2022 quarter. The decrease reflects lower coal sales volumes, higher production expenses, and lower realized prices in oil and gas royalties, partially offset by higher coal sales price per ton realization, and higher volumes in oil and gas royalties. EBITDA for the quarter was 227.6 million, down 10.3% is compared to the prior year period. Now turning to our balance sheet and uses of cash, Alliance generated 123.7 million, a pre cash flow in the 2023 quarter.

He mentioned in his prepared remarks that there is potential that we could pick up some additional.

Export ton sales in the fourth quarter, if that were to happen those would be at a little lower price than what our contract tons that would be rolled over into 2024.

That's the that's the issue so from a volume perspective, if we can.

Chip, what we want to ship and what we plan to ship.

We'll be in inventory levels.

Near where we talked about last quarter I believe.

Cary Marshall: Our total and net leverage ratios were 0.36 and 0.17 times respectively, total debt to trailing 12 months adjusted EBITDA. Total liquidity was 629.5 million at quarter end, which included approximately 197.2 million of cash on the balance sheet. During the 2023 quarter, we paid a quarterly distribution of 70 cents per unit, equating to an annualized rate of $2.80 per unit. This distribution level is unchanged sequentially and up 40% versus the prior year quarter. Additionally, we reduced our outstanding senior notes balance by 54.6 million and completed two strategic new venture investments in the send elements and impenitem during the 2023 quarter, totaling approximately $50 million.

If for some reason, we get delayed and we go to the 34 and a half and thats going to push those inventory levels up.

So it's a matter of.

Logistics on shipping I think from a production standpoint.

Our production impact for the quarter.

Both make peaky and EMC mining is going to continue into the fourth quarter.

So we've had some.

And people trying to retain sufficient people.

Emceed mining has been a challenge for us So we had to reduce a unit of production at AMC mining as towards.

Back end of the last quarter, that's going to continue on into the fourth quarter.

And then it may TD as Cary mentioned, the longwall is not expected to start until the end of November.

So we will pick up a little bit of times with the longwall production, but still.

Cary Marshall: Now turning to our updated guidance detailed in this morning's release. We have elected to slightly adjust our full year 2023 coal sales volumes and pricing, which will be highly dependent upon logistics during the fourth quarter. We now anticipate ARLP's overall coal sales volumes in 2023 to be in the range of 34.5 to 35 million tons. Our committed tonnage for 2023 is 35 million tons. Of that total, 29.7 million is committed domestically and 5.3 million tons are committed to the export markets.

We are you know our production is limiting our ability to ship some export tons coming out of those two operations.

I think the only other thing I would add to that Nate is when when I made reference to the lock outages and the customer maintenance.

<unk>.

Those those are flowing now the customer.

The customers that we were referring to in our comments are back online now.

So the tons tons, there are flowing as well.

Very helpful guys I appreciate that and then maybe continuing with the export theme for a second you mentioned.

Cary Marshall: We are encouraged by improving coal export market fundamentals based on recent international benchmark pricing. We believe there could be some incremental sales opportunities in late 2023 in the export markets. For 2024, we currently have 27.3 million tons committed, comprised of 25.7 million tons in the domestic markets and 1.6 million tons for the export markets. As we look to 2024, we do believe there is opportunity in 2024 for us to shift more tons into the export markets in 2024 versus 2023 levels based on current export market fundamentals.

Improving export coal demand based on the recent trends in the API two price as well as the.

Emerging opportunities in the market can.

Can you talk about what those emergency emerging opportunities entail.

And then second you mentioned 24 export potential bidders should improve markedly versus 'twenty three.

So how many export tons do you expect this year and then how should we think about arlp's export tonnage over the next few years.

So right now we're targeting five three which is what we've got contracted we could pick up another couple of vessels in 2023, so that number could go up a little bit.

Cary Marshall: Sales pricing for the years expected to be slightly lower than at the time of our last update. We have chosen to modestly adjust our outlook for average coal price realizations for 2023 to a new range of $64.50 to $66 per tonn from $65 to $66 per tonn previously communicated. On the cost side, we have narrowed our full year 2023 segment adjusted EBITDA expense per tonn to the new range of $39.50 to $40.50 per tonn from the previous range of[inaudible] dollars per ton.

Also possible that number could slide a little bit depending on vessels for the for this particular year as.

As we look to next year.

As we've said previously we believe we have a strong domestic.

Market share for right at 30 million tons.

We do think however in 2024.

Theres still continuing overhang of inventory at our utilities.

Cary Marshall: We have fourth quarter, 2023 long on moves scheduled at our Hamilton mine in the Illinois Basin and our tunnel ridge operation in Appalachia. We do expect Appalachia segment adjusted EBITDA expense per ton in the fourth quarter to be approximately 8-10% higher than 2023 quarter cost per ton. While Illinois Basin fourth quarter cost per ton are anticipated to be in line with the 2023 quarter. In our oil and gas segment we are reiterating our guidance ranges for the full year and all of our other guidance items are unchanged.

And.

We expect that the market pricing for export is going to be better than the domestic market. So we may be.

Tad lower than the 29, 7%, maybe its 28 don't know for sure.

And whatever that would be it would flow and to the export market as we think of our sales for 2024.

Right now I think a conservative estimate is consistent with what we're doing in 2023, but we do have we believe we would have the potential based on what we're seeing in the export market right now to possibly expand that $36 million.

Joe Kraft: With that I will turn the call over to Joe for comments on the market and his outlook for ARLP. Joe. Thank you Cary and good morning everyone.

If the export market opportunities due to the fact.

Uh huh.

Occur as we're projecting so.

Joe Kraft: I want to begin my comments by thanking the entire Alliance organization for their continued hard work and dedication. I am proud of all that has been accomplished through the first three quarters of the year as we are on track to achieve another record year, meeting last year's full years revenue and net income numbers. Our well-contracted co-order book enabled us to navigate and otherwise challenging operating environment during the 2023 quarter. Our coal segment achieved higher realized pricing per ton sold relative to both the 2022 and sequential quarters.

So there could be that spread of maybe go on as high as seven and a half million dollars.

To 8 million tons in the export market next year.

We're going to be depend between them.

Between the domestic and export.

Opportunities that are presented to us in 2024.

Yeah.

Got it Joe Thanks, and then just maybe wrap it up with a question on the domestic side I think you mentioned last quarter.

There are a number of customers out with Rfps looking to fill their books up for 'twenty, four and beyond but mainly for multi year periods.

Joe Kraft: A theme that continues to favorably impact year-to-date results, particularly with regards to EBITDA and net income. However we did face some difficult mining conditions in Appalachia at all three mines during the 2023 quarter which resulted in higher operating cost and fewer tons produced versus previous expectations. Mild weather experience in the first half of the year combined with lower natural gas prices throughout the year have impacted co-consumption in 2023 preventing us from topping last year's record co-cells volumes.

You mentioned some of the issues. We've had this year with harsh utility stockpiles low nat gas prices, but it'd be great to get your updated thoughts on what you guys are seeing in the market how about demand looks for the next couple of years.

Yes.

We are seeing a couple of them.

We're participating in a couple of solicitations right now for tonnage and that 2025 to 2028 time period.

Again for 2024, there is some.

Solicitations also.

Volumes in the out years than it is in the 2024.

Oh.

When we look at.

Joe Kraft: As we looked the next year we have seen a recent increase in the natural gas forward curve as well as a jump in API-2 pricing due in large part to the conflict in the Middle East. At projected pricing levels we believe that our export potential in 2024 will improve markedly as compared to the back half of 2023. Our oil and gas royalty segment for reporting continued growth in the 2023 quarter resulting in record production volumes, underscoring the success of recent acquisitions in core parts of the prolific Fermi and Basin.

The tonnage we were able to book in the third quarter, we actually.

$1 1 million tons of <unk>.

<unk>, but it's mostly in 2023.

And then that is allowed for some rollover into 2024.

As we look at that position so again.

Right.

Comfortable that.

25, the market reopens.

Where we will be at that 30 million ton level at least on domestic sales.

And we'd like to expect that that's going to continue through the balance of this decade that we would be at that 30 million tonne.

Joe Kraft: All those average realized that pricing for BOE during the 2023 quarter was lower compared to near record levels in the 2022 quarter. Our royalty portfolio is well positioned to provide significant cash flow via hedge-free exposure to commodity price and cost-free organic growth. We expect additional growth and production will lead to record production volumes in 2024 as we continue to invest in minerals. The strong cash flow generation of our underlying businesses positions us to continue improving our balance sheet and pursue the highest invest uses for our capital.

The level of domestically.

And feel that the contracts will definitely be there for us.

As we progress looking forward for the next day until the end of the decade.

And then the export market.

We'll just have to read that and see if it's going to be in that seven to 8 million ton level slide pack slide it up yes. It depends on what had been the market is going to be at the time.

I appreciate those comments so I'll leave it there. Thank you guys for your time and best of luck in the fourth quarter.

Thank you.

Thank you next question is coming from Mark question from Noble capital markets. Your line is now live.

Joe Kraft: During the quarter, we paid our regular distribution, repurchased and redeemed a portion of our outstanding senior notes, and announced two exciting investments made by our new Ventures Group. The first was a $25 million investment and a send elements, which is a U.S.-based manufacturer and recitaler of sustainable engineered battery materials for EVs. The investment was part of their $460 million Series D funding round, which went combined with a $480 million DOE grant.

Thank you and good morning, so just.

Continuing that discussion on 2024.

So I mean for 2023 from the last quarter. It looks like you picked up 500000 tons in the export market and for 2024, you picked up an additional 400000 tonnes kind of split evenly between domestic and exports and that's a little slower than where you were last year third quarter compared to the second quarter.

So.

Is this just is this just a timing or do you think I mean do you are you looking at it from a standpoint that yes. This overhang, it's slowing things down a little bit could weigh on domestic pricing, but youll make some of that up in the export market or do you feel like the domestically.

Joe Kraft: We'll help advance the construction of North America's first commercial-scale manufacturing facility, producing catholic materials for EV batteries located essentially in our backyard in Hopkinsville, Kentucky. Beyond our initial contribution, we plan to evaluate additional partnership opportunities with the send to expand our investment in the battery recycling industry and support the critical materials infrastructure needed to facilitate the ensuring of U.S, battery manufacturing. The second investment included an additional $25 million in infant item, a Texas-based developer and manufacturer of high-efficiency electric motors, as part of their ongoing Series E equity raise.

It's just kind of a timing that you would kind of at the very least be kind of even for 2023 levels.

And we think consumption.

And the U S domestic market for coal and 24 will be very comparable to 23.

And we know that was impacted by natural gas prices.

Right.

Are seeing natural gas prices rise compared to where it's been in 2023, so there could be some upside to that.

Joe Kraft: If you recall, we originally invested in infant item in April of 2022, and with today's announcement, our total investment in infant item is now $67 million, making us a meaningful investor in the company. We believe infant items patented Air Corps motor technology has significant market potential, and our technology division, Matrix, is actively exploring opportunities to collaborate with infant item and incorporate the technology into our current mining operations.

But there is still the increased inventory that the utilities have to.

They would like to work down and maybe that's 20 day supply in both Illinois Basin and northern App.

So we're not anticipating.

The increase in sales as I, just mentioned to the domestic market. So we do believe we will be.

Selling more tons in the export market in 'twenty four 'twenty.

<unk> 23, as we've looked at our book of business today.

So again, we're looking at helpful 35 million tons of sales this year.

Operator: In closing, I am proud of Aeropiece Performance here to date and encouraged by the opportunities in front of us. We remain focused on finishing the year strong and gearing up for what should be another successful year in 2024. That concludes our prepared comments, and I'll now ask the operator to open the call for questions. Operator. Thank you, and I'll be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad.

$35 million next year.

Possibly go into 36, depending on what the demand is for <unk>.

Cole.

Okay. No. That's very helpful. And then also this quarter I have not assumed any outside coal purchases during the quarter, you know and you had some in the second quarter.

Do you expect any in the fourth quarter.

So those purchases were really caused by.

Our longwall not producing in the third quarter okay.

Operator: A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to move your question from the queue. Proper participants using speaker equipment may be necessary to pick up your handset before pressing star 1. One moment please, what we pull for questions.

So when we look in the fourth quarter to carry that we.

Doesn't have very much maybe just a modest amount it's not very much at all mark.

Okay, Great and then just lastly on capital allocation you know Joe you did a very.

Nathan Martin: Our first question is coming from Nathan Martin from Bitchmore Company. Your line is now live. Hey, thanks operator. Good morning, Joe. Carrie. I appreciate you taking my questions. Renate. Just maybe a quick clarification to start. Carrie, you mentioned Appalachian cost for tongue could be up 8 to 10% in the fourth quarter. Just want to confirm that's first is the 3 queue 23 results that 54 84. And you also said a minute ago that IB cost and innovation cost should be flat. Was that also with the third quarter 23?

Articulated kind of your capital allocation strategy on.

Cary Marshall: Yes, that's right. Okay, perfect. Thanks for that. They're kind of moving on.

On the last quarter.

Call, but the company is finding some very promising investments outside of the traditional businesses. So I mean, if you were to wanting to increase let's say the amount of investments.

Side the traditional businesses.

Are you thinking about claims on cash flow for 2024.

Being the debt repayment of the dividend or the distribution.

Versus growth.

<unk> expenditures.

Yeah. So I think when we are.

To respond to that question, we have been evaluating opportunities to refinance some of the <unk>.

Joe Kraft: I think, you know, when we talked last quarter, obviously the expectation was sales with outpaced production in a second half to draw down inventories, I think to around half a million tons or so, whether you're enforcing that, but didn't really work out here in the third quarter, because in the items you guys mentioned, I think it's only about a hundred thousand tongue draw. You know, what do you need from a logistics standpoint to kind of get you to the high with a low end of your revised for your guidance?

Senior notes as opposed to paying them off.

And it would read that cash flow up so theres about four different avenues.

Avenues, we're evaluating them, we find that they're promising.

More likely than not we'll be able to do that.

So that's going to free up.

So were 285 today, Gary So that's right yes.

So assuming that we can refinance at $2 85, that's going to free up some.

Joe Kraft: Are there any, are there any carryover effects from some of those three two items you guys mentioned, like, you know, the lock outages, customer maintenance, et cetera. Yeah, so when you look at the sales range, we, we show that our contract at position for 2023 is 35 million. That's what we are targeting to ship in the fourth of full year. There could be logistical impacts. It could drop that to the 345.

Capital that allows us to <unk>.

Followed a path that I talked about last quarter on our capital allocations.

Well that's very helpful. Thank you so much.

Thank you next question is coming from David Martin from singular Research. Your line is now live.

Okay.

Hi, guys. Thanks for taking my questions.

Just wanted to follow up actually.

On kind of where that last line of question I was going with regard to the.

Joe Kraft: The tons are sold. Whatever would not be delivered would be really primarily driven by making sure that we have the proper transportation and deliveries, vessel loadings, et cetera, occurring during the fourth quarter. Whatever doesn't occur in the fourth quarter, we'll roll over into 2025. So part of our mix, when you get into sales price and you get into the volume, it does try to focus on, you know, what will be the specific contracts that are being served in the particular years.

So yeah acquisitions outside of the coal space into some of the newer ventures.

Could you just talk about kind of the long term.

Our long term plan and thought process in terms of.

How.

How large these external investments to grow and.

Obviously, I think it's pretty exciting that the acquisition.

Into the.

The electric vehicle.

Battery recycling space could you just talk about.

Any other spaces that you are looking at.

Joe Kraft: So when you think in terms of the pricing, it's really not from one quarter to the next. I mean, the revenue is going to be basically the same. It's just a timing issue. You know, Carrie mentioned in his prepared remarks that there is potential that we could pick up some additional export tons cells in the fourth quarter. If that were to happen, those would be at a little more price than what our contract tons that would be rolled over into 2024.

Outside of the traditional coal oil and gas spaces.

Could could be potentially on the horizon.

Yeah. So I think we mentioned in our release as well as in Carey's comments in mind as well that.

Both of our investments and.

The investment in that sand as well as the investments that we've made and hence an item we believe.

Joe Kraft: So that's the, that's the issue. So from a volume perspective, if we can ship what we want to ship and what we plan to ship. You know, we will be in inventory levels near where we talked about last quarter, I believe. If for some reason we get delayed and we go to the 34 and a half, and that's going to push those inventory levels up. So it's a matter of the logistics on shipping, I think, from a production standpoint.

Not only are they investments in those companies, but we believe that they will provide strategic opportunities for us.

That we could invest.

Yeah, it's a little premature to.

Give the exact dollar amounts as to what that could be but it could be sizable so what we're looking for with those relationships are the ability to invest.

And businesses that we can bring online that would be sustainable for many years and that can generate cash flow that actually can be financeable as well so.

Joe Kraft: You know, our production impact for the quarter and both make peaky and MC mining is going to continue into the fourth quarter. So we've had some people, you know, trying to retain a sufficient people. And our MC mining has been a challenge for us. So we had to reduce the unit of production at MC mining towards the back end of the last quarter. That's going to continue into the fourth quarter. And then at MC, as Carrie mentioned, the long wall is not expected to start until the end of November. So we'll pick up a little bit of times with the long wall production, but still we are, you know, our production is limiting our ability to ship some export tons coming out of those two operations.

So thats our goal within those two investments.

We have focus within our technology group at matrix.

To focus on the battery.

Space and that battery space can be anything from what we're talking about with the sand it could be with battery recycling.

And also be in battery storage.

Whether it be for industrial whether it would be.

Commercial whether it be for utility.

Great.

<unk> storage that we think is necessary.

There could be in addition to.

The recycling other aspects of battery technology, we're looking at some manufacturing work that.

Cary Marshall: I think the only other thing I would add to that, Nate, is, you know, when, when I made reference to the lockoutages and the customer maintenance issues, those, those are flowing now, the customer, the customers that we were referring to in our comments are back online now. And the export theme for second, you mentioned improving export cold demand, you're based on our recent trends in the UK to price, as well as the, you know, emerging opportunities in the markets.

Can apply to the transmission area.

And the build out of the grid.

Utilizing our.

Higher machine shops that we have within.

They are being managed by the matrix treatment as well.

We're also looking at matrix and their products that they are developing we talked in the past about them growing.

There.

Cash flow with innovative products that they are bringing to market specifically their intelligent which is.

And the.

The product that we have now.

Cary Marshall: Can you can you talk about what those emerging emerging opportunities in tail. And then second, you mentioned 24 export potentially should improve marketly versus 23. So how many export tons do you expect this year, and then how should we think about arrow piece export tonnage of the next few years. So right now we're targeting 5.3, which is what we've got contracted. We could pick up another couple of vessels in 2023. So that number could go up a little bit.

<unk> has.

<unk> been providing the cash flow.

Cary Marshall: It's also possible that number could slide a little bit, depending on vessels for this particular year. As we looked the next year, you know, as we said previously, we believe we have a strong domestic market share for right at 30 million tons. We do think, however, in 2024 that there's still continuing overhang of inventory at our utilities. And we expect that the market pricing for exports going to be better than the domestic market.

That's being brought in.

Internationally, and we believe that has growth potential and we're booking or booking orders for 2024 in that specific area of matrix. In addition, they've got Ami pro which as we've talked about that's also going to be rolling out in 2024, which is a collision avoidance.

Camera type technology for the forklift industry.

We think that within that.

Technology Company, we have there are a lot of exciting things that their R&D group, we're looking at.

That we think will be adding meaningfully as we look over the next five to six years.

<unk> growing that particular segment to hopefully it will be large enough to be a segment in three to four years.

If we can.

Bring these things to market like we're currently anticipating so those are some of the ideas that we have.

And.

Obviously, we're continuing to believe in our minerals segment and continuing to want to invest in that.

Cary Marshall: So we may be a pad lower than the 29 seven, maybe it's 28. Don't know for sure. And whatever that would be, it would flow into the export market. As we think of ourselves for 2024 right now, I think a conservative estimate is consistent with what we're doing in 2023. But we do have, we believe we would have the potential based on what we're seeing in the export market right now to possibly expand that 36 million.

So that that can continue to grow.

As well as the other new venture concepts it.

I just outlined.

Okay.

Okay.

But it's certainly very compelling for divesting away from the core business and making it.

Okay.

A little bit more interestingly.

Some potential upside kickers, so that's that's compelling.

Cary Marshall: If the export market opportunities do the fact occur as we're projecting. So there could be that spread of, you know, maybe going as high as 7.5 million to 8 million tons in the export market next year. It's going to be depend between the between the domestic and export opportunities that are presented to us in 2024. Got it Joe. Thanks.

With regard to the distribution, which you guys continue to maintain a very solid distribution, obviously where the.

Where the units are trading now dividend yield is.

Very attractive.

Hum.

With the cash flow at this at this point in time and the outlook.

Port, possibly an increase in that distribution.

As we start to head into next year or given where the units are trading is.

Joe Kraft: And then just maybe wrapping up with a question on the domestic side. I think you mentioned last quarter. There are a number of customers out, you know, with RFPs looking to fill their books up for 24 and beyond. I think many for multi year periods. You know, you mentioned some of the issues we've had this year with the high suitility stockpiles on that gas prices, but it should be great to get your updated thoughts on what you guys are seeing in the market and how that the men looks for, you know, the next couple of years.

The board, perhaps evaluating maybe repurchasing some of the units.

I think that as we.

We look to next year, we're still in our planning process.

However.

Sort of given us some indication that we're looking at next year pretty much being a mirror or this year as far as.

Where we are right now thinking that our cash flow would be good.

And so when we think of distributions we have the capability to.

Joe Kraft: Yeah, we are seeing a couple of, we're participating in a couple of solicitations right now for tonnage in the 2025 to 2028 time period. At the end for 2024, there are some solicitations, also there are more volumes in the out years than it is in 2024. When we look at the tonnage, we were able to book in the third quarter, we actually booked 1.1 million tons of opportunity, but it's mostly in 2023.

Maintain or grow I think that right now we're focused on.

Finishing out this year strong and we are committed.

As I have repeated the last two calls.

With our distribution at the level. It is this year to be Frank were a little disappointed that the market hasn't appreciated dose.

Bye.

Okay.

The unit price not reflecting to where we've got a yield that's probably.

Higher than it should be.

In other words, our unit price should be higher than where it is.

But.

The board will once we finalize our plan to present that to them.

Joe Kraft: And then that has allowed for some roll over into 2024 as we look at that position. So again, we're very comfortable that 2025, the market reopens to where we will be at that 30 million tonn level at least on domestic sales. And we would like to expect that that's going to continue through the balance of this decade that we would be at that 30 million tonn level domestically and feel that the contracts will definitely be there for us, as we progress looking forward for the next decade, until the end of the decade.

And we will have a preliminary.

Yeah.

Review with them in December but the final plan will be approved in January and we'll be in a position to better answer your question as to what the future distribution policy will be at our January.

Call.

Fair enough. Thanks, guys for taking the questions and good luck with the fourth quarter.

You bet.

Thank you as a reminder, that star one to be placed in the question queue. Our next question is coming from Dave storms from Stonegate. Your line is now live.

Good morning.

Good morning.

Joe Kraft: And then the export market, you know, we'll just have to read that and see if it's going to be in that 7 to 8 million tonn level, slide packs, slide it up, it depends on whatever the market's going to be at the time. Appreciate others comments. You all leave it there.

I appreciate you taking questions.

Just wanted to go back earlier in the call you had mentioned that.

Logistics are going to be the big driver of what your ship tons look like.

To close out the year are there any variables any notable variables on logistics channels that youre, keeping a particular island.

Nathan Martin: Thank you guys for your time and best of luck in the fourth quarter. Thank you.

The primary is just our export shipments so we do have.

Mark Rashman: Next question is coming from Mark Rashman from Noble Capital Market. Who line is that live? Thank you.

Inventory at the Pierre.

But we're going to need to continue to ship coal from our mines to the peers and we've had some more water.

Joe Kraft: Good morning. So just continuing that discussion on 2024. So I mean, you know, for 2023 from the last quarter, it looked like you picked up 500,000 tons in the export market. And for 2024, you picked up an additional 400,000 tons, kind of split evenly between domestic and export. And that's a little slower than where you were last year, third quarter, compared to the second quarter. So is this just a timing or do you think, I mean, are you looking at it from the standpoint that yes, this overhang, it's slowing things down a little bit.

In the Mississippi that has slowed some of the barge movements. So it's really just a matter of timing and barge.

Availability to be able to shift tons to be able to also match when the vessels come in and what the loading dates actually turn out to be so that's the primary logistical issue.

B based I don't think.

With our domestic customers there are any concerns about.

Barge availability water et cetera, but it's more on the export side, where we could have some timing issues on vessel loadings.

Joe Kraft: It's a good way on domestic pricing, but you'll make some of that up in the export market. Or do you feel like domestically, it's just kind of a timing that you would, at the kind of the very least, you know, be kind of even with 2023 levels. We think consumption in the US domestic market for coal in 24 will be very comparable to 23. And we know that was impacted by natural gas prices.

Understood. Thank you and then.

You also mentioned in the call just some challenges.

Labor and equipment in the quarter.

Should we expect that that will be all wrapped up before the end of fiscal year 2004.

From an equipment standpoint, yes that was isolated.

Okay.

At.

Basically it both ANC mining and at tunnel Ridge.

Joe Kraft: We are seeing natural gas prices rise compared to where it's been in 2023. So there could be some upside to that. But there is still the increased inventory that the utilities have to, they would like to work down. And maybe that's 20-day supply at both the Illinois basin and in northern half. So we're not anticipating the increase in sales as I just mentioned to the domestic market. So we do believe we will be selling more times in the export market in 24 than 23 as we look at our book of business today. So again, we're looking at 35 million times sale this year, 35 million next year, possibly going to 36, depending on what the demand is for coal.

Tunnel Ridge has already corrected itself, we've gotten the repairs the delays.

Are behind us.

At <unk> mining, we've had new deliveries for equipment to replace the older equipment.

That were delayed that.

Caused some of the impact on production and I think all of that those those.

Items are expected to be delivered now as we speak.

So we do believe by the end of the year from an equipment standpoint that will be behind us as far as head count.

Right now we are planning to run AMC at three units.

So thats still.

And the balance so that still could be an issue for.

PMC mining so that could be one unit of production.

At all other mines.

We're expecting that we'll be fully staffed to be able to meet our production.

Cary Marshall: Okay, no, that's pretty helpful. And then also, you know, this quarter, I have not assumed any outside coal purchases during the quarter, you know, and you had some in the second quarter. Do you expect any in the fourth quarter? So those purchases were really caused by our long, long, not producing in the third quarter. Okay. So when we look at the fourth quarter, Cary, we don't think we have very much, maybe just a modest amount. It's not very much at all more.

Cary Marshall: Okay, great.

<unk> debt.

We're able to do this year and continue into next year.

So we are actually seeing some and we are.

Actually seeing some improvement in Illinois basin.

So we've done some.

<unk> of our approach to try to recruit.

Opening our Henderson County mine Thats opened a new market for some.

Some workers that were starting to see some increased applicant flow this encouraging for our river view mine.

Joe Kraft: And then just lastly, on capital allocation, you know, Joe, you did a very, you know, articulated kind of your capital allocation strategy on the last quarter call. But, you know, the company's finding some very promising investments outside its traditional businesses. So I mean, if you were to wanting to increase, let's say, you know, the amount of investments, you know, outside the traditional businesses, how are you thinking about claims on cash flow for 2024, you know, being, you know, the debt repayment, the dividend or the distribution, you know, versus growth growth expenditures.

Yeah.

Okay, that's great to hear.

And then lastly, just.

Love to get.

Your thoughts on the domestic regulatory environment anything that youre watching with the upcoming election cycle or anything of that nature.

Alright.

Regulatory standpoint, the big issues.

Related to our customers.

I mentioned.

That in the last quarter.

Not a loss progressed in that area.

Eight different regulations that EPA.

Joe Kraft: Yeah, I think when we're to respond to that question, we have been evaluating opportunities to refinance some of the senior notes as opposed to paying them off. That would read that cash flow up. So there's about four different avenues. We're evaluating and we find that they're promising that it's more likely to not will be able to do that. So that's going to free up. So we're 285 today carries. That's right. Yeah. So assuming that we can refinance that 285 that's going to free up some capital that allows us to follow the path that I talked about last quarter on our capital allocations.

As proposed there is only one that has been finalized.

And they are still out there at the same time, what we've seen.

Really.

Starting from last call through today, and I think is going to continue is that we're starting to.

Mark Rashman: That's very helpful. Thank you so much.

David Marsh: Thank you.

The industry is starting to value the need for reliability and because there is a concern of reliability and what the impact that these regulations may have on reliability of electricity generation.

That may have slowed down that process here I don't know for I don't really know why we haven't seen much progress I'm not complaining but.

Is still.

Out there is still an issue.

However, I think the demand thats needed.

David Marsh: Next question is coming from David March from singular researcher, why does that last? Hi, guys. Thanks for taking questions.

He has been a recognition that.

Yeah.

Similar to what you look at where the administration is on oil right.

Joe Kraft: I just wanted to follow up actually on kind of where that last line of questioning was going with regard to the acquisition outside of the coal space into, you know, some of the newer ventures. Could you just talk about kind of a long term, you know, a long term plan about process in terms of, you know, how, how large these external investments could grow and obviously, you know, I think it's pretty exciting that the acquisition.

They want to make sure that.

Yeah.

Gasoline prices are reasonable that low so theyre going to try to encourage enough supply to come on the market in an election year.

I would hope that they don't want to see blackouts and brownouts.

On the electric side in an election year either so.

So maybe things will.

Yeah.

Delay be delayed until after the election, it is hard to know but.

They are still out there from EPA perspective at the same time.

Joe Kraft: And into the electric vehicle or site better, better recycling space could use talk about, you know, any other spaces that you're looking at, you know, outside of the traditional coal and oil and gas spaces that could, could be potentially on the horizon. Yeah, so I think we mentioned in our release as well as in Cary's comments and in mind as well that both of our investments in with the investment in it's end as well as the investment that we've made in the night and we believe not only are the investments in those companies, but we believe that they will provide strategic opportunities for us that we could invest and, you know, it's a little premature to give you exact dollar amounts as to what that could be, but it could be sizable.

Theyre just artificial compliance dates there is no reason why they have to be on the certain dates that they got in proposed and so we haven't seen the final take that comment. So we got to wait and see what the final rules arent really be able to answer your question.

That's very helpful. I appreciate the color and good luck in the fourth quarter.

Thank you Dan.

Thank you we reached end of our question and answer session I like to turn the floor back over to caring for any further or closing comments.

Thank you operator and to everyone on the call. We appreciate your time this morning as well and also your continued support and interest in alliance. Our next call to discuss our fourth quarter 2023 financial and operating results is currently expected to occur in January and we hope everyone will join us again at that.

At times.

This concludes our call for the day. Thank you.

Joe Kraft: So what we're looking for with those relationships are the ability to invest in businesses that we can bring online that would be sustainable for many years and that can generate cash flow that actually can be financible as well. So that's our goal within those two investments. We have focused within our technology group at Matrix to focus on the battery space and that battery space can be anything from what we're talking about with the sand.

Thank you that does conclude today's teleconference. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.

Yeah.

Joe Kraft: It could be with battery recycling. You can also be in battery storage, whether it be for industrial, whether it be commercial, whether it be for utility, grade, battery storage that we think is necessary. There could be in addition to the recycling other aspects of battery technology. We're looking at some manufacturing work that can apply to the transmission area and the build out of the grid utilizing our machine jobs that we have within the being managed by the matrix rig as well.

Joe Kraft: We're also looking at Matrix and their products that they're developing. We've talked in the past about them growing their cash flow with innovative products that they are bringing to market specifically there in telephone, which is the product that we have now that has been providing the cash flow. That's being broadened internationally and we believe that has growth potential and we're booking orders for 2024 and that specific area of matrix in addition.

Joe Kraft: They've got Army Pro, which is we've talked about. It's also going to be rolling out in 2024, which is a collision avoidance camera type technology for the forklift industry. We think that within that technology company, we have there are a lot of exciting things that there are indeed group are looking at that we think will be adding meaningfully as we look over the next five to six years, meaningfully growing that particular segment, hopefully it will be large enough to be a segment in three to four years if we can bring these things market like we're currently anticipating.

Joe Kraft: So those are some of the ideas that we have, and obviously we're continuing to believe that our minerals segment and continuing to want to invest in that so that that can continue to grow as well as the other new venture concepts that I just outlined. You know, a little bit more interesting with some potential upside kickers, so that's compelling.

Joe Kraft: With regard to the distribution, which you guys continue to maintain, very solid distribution, obviously where the units are trading now. Then you know, very attractive with the cash flow at this at this point in time and the outlook, support, possibly an increase in that distribution, you know, as we start to head into next year or given where the units are trading is, you know, is the board perhaps evaluating, you know, maybe repurchasing some of the units.

Joe Kraft: I think that as we looked the next year, we're still in our planning process, however, sort of given you some indication that we're looking at next year pretty much being a mirror this year as far as where we are right now thinking that our cash flow would be good. And so when we think of distributions, we have the capability to maintain or grow, I think that right now, you know, we're focused on finishing out this year's strong and we are committed as I've repeated the last two costs with our distribution at the level it is this year.

Joe Kraft: We to be frank, we're a little disappointed that the market hasn't appreciated those by the unit price, not reflecting to where we've got to yield. It's probably higher than it should be. In other words, the unit price should be higher than where it is. But, you know, the board will once we finalize our plan, present that to them, we'll have a preliminary review with them in December, but the final plan will be approved in January and will be in a position to better answer your question as to what the future distribution policy will be at our January call.

David Marsh: Fair enough, thanks guys for taking questions and good luck with fourth quarter. You bet it. Thank you.

David Storms: As a reminder, that star one to be placed in the question to our next question is coming from Dave Storms from Stonegate, you're light is now out.

Joe Kraft: Morning. Good morning. Appreciate you taking questions. Just wanted to go back earlier in the call, you had mentioned that logistics are going to be the big drive for what your ship tons look like to close out the year. Are there any variables, any notable variables and logistics channel that you're keeping a particular eye on? The primary is just our export shipments. So we do have inventory at the pier, but we're going to need to continue to shift toll from our minds to the pier and we've had some water in the Mississippi that has slowed some of the barge movements.

Joe Kraft: So it's really just a matter of timing and barge. Advilability to be able to shift our times, to be able to also match when the vessels come in and what the loading dates actually turn out to be. So that's the primary logistical issue that would be faced. I don't think with our domestic customers. There are any concerns about parts availability water, et cetera, but it's more on the export side to where we could have some timing issues on vessel loadings.

Joe Kraft: [inaudible] The industry is starting to value the need for reliability and because there is a concern of reliability and what the impact of these regulations may have on reliability of electricity generation, you know, that may have slowed down the process here. I don't know for, I don't really know why we haven't seen much progress, I'm not complaining, but it's still out there, it's still an issue, however, I think the demand that's needed has been a recognition that, you know, similar to what you look at where the administration is on oil, right?

Joe Kraft: I mean, they want to make data on sure that gasoline prices are reasonable that low. So they're going to try to encourage enough supply to come on the market in an election year. I would hope that they don't want to see black outs and brown outs on the electric side in an election year either. So maybe things will delay, be delayed until after the election, it's hard to know, but they're still out there from EPA perspective at the same time.

Joe Kraft: There just aren't official compliance dates. There's no reason why they have to be on the certain dates that they got in proposed and so we haven't seen the final, they've got comments, so we got to wait and see what the final rules are to really be able to answer your question.

David Storms: That's very helpful. Appreciate the color and good luck in the fourth quarter. Thank you.

Cary Marshall: We reached out to our question and I just had to turn the floor back over to Carrie for any further closing comments. Thank you, operator. And to everyone on the call, we appreciate your time this morning as well and also your continued support and interest in alliance. Our next call to discuss our fourth quarter 2023 financial and operating results is currently expected to occur in January and we hope everyone will join us again at that time.

Operator: This concludes our call for the day. Thank you. It does conclude today's telecomference. Let me disconnect your line at this time and have a wonderful day. We thank you for your participation today.