F O C U S E D
2017 ANNUAL REPORT
A L L I A N C E R E S O U R C E PA R T N E R S , L . P.
A L L I A N C E H O L D I N G S G P, L . P.
FOCUSED ON
FOCUSED ON EXCELLENCE
FELLOW UNITHOLDERS, 2017 was a year of focused efforts and positive results. Through a
challenging market in 2016, we made strategic decisions designed to lay a foundation for
long-term performance, value and reliability for our unitholders. Last year, we remained true
to those decisions, building on our foundation and executing plans with an unwavering focus.
The results speak for themselves. In 2017, Alliance delivered an impressive performance by
increasing sales and production volumes, reducing operating expenses and debt outstanding,
and generating strong EBITDA, distributable cash flow and distribution coverage.
We also set and accomplished a number of significant objectives last year. We entered 2017 with
a goal of alleviating uncertainty in the debt capital markets. We accomplished this through the
successful placement of a $400 million, eight-year bond offering and a four-year extension
of our revolving credit facility. As a result, we exited the year with a stable, long-term capital
structure with ample liquidity.
The Alliance Partnerships also took the first step toward simplifying our structure through an
Exchange Transaction. The Exchange Transaction eliminated AHGP’s incentive distribution
rights and converted its general partner interest in exchange for the issuance of 56,100,000
ARLP common units. Completed in July, it further enhanced our capital markets capacity and
access. We are also moving forward to complete the process of fully simplifying the Alliance
Partnership structure, which will result in ARLP being the only publicly traded reporting entity.
2017’s strong operating and financial performance was the result of long-term thinking, smart
planning, and hard work by many people. I’m grateful to our team for their steady focus on the
road ahead. In a market full of distractions, their single-minded pursuit of excellence has served
the Alliance family well.
JOSEPH W. CRAFT III
President, Chief Executive Officer, and Director of ARLP
and AHGP, and Chairman of the Board of AHGP
March 30, 2018
1
ALLIANCE HAS CONSISTENTLY
ALLIANCE HAS A TRACK
DELIVERED STRONG RESULTS
THROUGHOUT MARKET CYCLES.
RECORD OF OPERATIONAL
AND FINANCIAL EXCELLENCE.1
1 Company filings and estimates. ARLP has met or exceeded production guidance for five consecutive
years and revenue and adjusted EBITDA guidance four of the last five years.
2
FOCUSED ON PERFORMANCE
We’re proud of our performance in 2017. Even with a market reset, focused
planning and faithful execution of our plans led to increased sales and
production volumes, lower operating expenses and improved Segment
Adjusted EBITDA Expense. Revenues, net income and EBITDA met expectations.
The contribution to net income and EBITDA from our investments in oil and
gas minerals and compression services also increased.
TONS
PRODUCED
GREW
6.7%
WHILE
TONS SOLD
INCREASED
3.1%
AS EXPECTED,
COAL SALES PRICE
REALIZATIONS FELL
10.9%
TO
$45.24
per ton sold due to
the expiration of
higher-priced legacy
contracts in 2016
leading to a decrease
in coal sales revenue
(8.1%) and total
revenues (7.0%).
SEGMENT ADJUSTED EBITDA EXPENSE
per
IMPROVED
ton
sold.1
5.9%
OPERATING EXPENSES
FELL
2.6%
even as sales and production
volumes increased 1.1 million tons and
2.4 million tons, respectively.
SEGMENT ADJUSTED
EBITDA MARGINS1
WERE A HEALTHY
39.9%
($18.05 per ton sold).
1 Please see inside back cover for a reconciliation of these non-GAAP measures to the most closely comparable GAAP measures.
3
FOCUSED ON
RELATIONSHIPS
Our top 13 customers have been with us a combined 252 years.
PRESENCE
In 2017, we were the largest coal producer in the Illinois Basin and
the second-largest coal producer in the eastern United States.
STRENGTH
Our balance sheet remains strong, with LTM total debt/adjusted
EBITDA at a conservative 0.95x 1.
1 Please see inside back cover for a reconciliation of this non-GAAP measure to the most closely comparable GAAP measures.
4
Illinois
Indiana
Ohio
8
Pennsylvania
Maryland
7
2
1B
1A
3
4
5
West Virginia
Kentucky
6
Virginia
ILLINOIS BASIN
current operations
APPALACHIA
current operations
1. GIBSON COMPLEX
6. MC MINING COMPLEX
1A. GIBSON SOUTH
1B. GIBSON NORTH EXPECTED
T O RESUME PRODUCTION
IN 2018.
2. HAMILTON COMPLEX
3. RIVER VIEW COMPLEX
4. DOTIKI COMPLEX
5. WARRIOR COMPLEX
7. METTIKI COMPLEX
8. TUNNEL RIDGE COMPLEX
MOUNT VERNON
TRANSFER TERMINAL
HENDERSON/UNION
RESERVES
5
6
FOCUSED ON BALANCE
ARLP’s balance sheet is the result of a disciplined strategy focused on long-term
performance and stability. At the end of 2017, total debt remained conservative
at 0.95 times trailing twelve months Adjusted EBITDA.1 Liquidity was a healthy
$587.0 million. The bonds we issued last April have performed well.
With our conservative balance sheet, ability to generate attractive cash flows,
strong bond market performance and simplified financial structure, we believe
ARLP has ample debt and equity capital market access and the capacity to
execute our plans and pursue future opportunities …
ARLP’S PERFORMANCE HAS
IT’S HARD TO FIND A
EARNED BEST-IN-CLASS
COMPANY THAT CAN RELIABLY
RATINGS FROM MOODY’S
AND S&P.2
PAY INVESTORS SUCH [AN
ATTRACTIVE] YIELD.3
1 Please see inside back cover for a reconciliation of this non-GAAP measure to the most closely
comparable GAAP measures, “net income attributable to ARLP.”
2 Moody’s/S&P corporate ratings of Ba3/BB+
3 The Motley Fool, “3 Top Value Stocks to Buy in February,” February 2018.
7
FOCUSED ON THE FUTURE
We built Alliance by creating sustainable, long-term growth in cash flows to
support increased distributions to unitholders. We see numerous opportunities
to continue, both within our core coal business and in areas outside of coal:
1
INVEST TO BUILD FUTURE CASH FLOW GROWTH.
In coal, ARLP is positioned to expand production to capture more market share, as domestic and/or
international opportunities present themselves. Outside of coal, we expect cash flow from investments already
made to grow meaningfully and we will continue to seek opportunities we believe will provide long-term
sustainable cash flow and/or attractive returns.
2
FOCUS ON RETURNING CASH TO UNITHOLDERS.
The Board of Directors increased the ARLP cash distribution for the 2017 Fourth Quarter by one
half of one cent per unit to an annualized rate of $2.04 per unit (a 16.6% increase over the cash
distribution for the 2016 Fourth Quarter). Based upon on our current outlook, management expects
to recommend to the Board similar distribution increases for each quarter in 2018.
AS WE EXECUTE OUR STRATEGY, ARLP REMAINS COMMITTED TO
MAINTAINING THE FINANCIAL DISCIPLINE, SOLID DISTRIBUTION COVERAGE
AND CONSERVATIVE BALANCE SHEET THAT HAS SERVED US SO WELL.
8
ARLP IS PLANNING TO BOOST
ARLP EXPECTS TO MAINTAIN
SALES AND PRODUCTION
VOLUMES IN 2018 AND
HAS ALREADY PRICED AND
COMMITTED 94% OF ITS
PROJECTED OUTPUT.1
A STRONG COVERAGE
RATIO WHILE INCREASING
UNITHOLDER DISTRIBUTIONS
IN 2018.1
1 Company analysis and estimates [as of March 16, 2018].
Reconciliation of GAAP “net income attributable to ARLP” to non-GAAP “EBITDA,”
“Adjusted EBITDA” and “Distributable Cash Flow”
(in thousands)
Net income attributable to ARLP
Net income (loss) attributable to noncontrolling interests
Net Income
Depreciation, depletion and amortization
Interest expense, net
Capitalized interest
Income tax expense (benefit)
EBITDA
Asset impairment
Acquisition gain, net
Debt extinguishment loss
Adjusted EBITDA
Interest expense, net
Income tax expense
Year Ended December 31
2017
2016
2015
2014
2013
$ 303,638
$ 339,398
$ 306,198
$ 497,229
$ 393,490
563
304,201
268,981
39,842
(551)
210
140
339,538
336,509
31,017
(358)
13
612,683
706,719
-
-
8,148
620,831
(39,842)
(210)
-
-
-
706,719
(31,017)
(13)
(27)
306,171
323,983
30,389
(695)
21
659,869
100,130
(22,548)
-
737,451
(30,389)
(21)
(16)
497,213
274,566
32,746
(833)
-
-
393,490
264,911
35,074
(8,992)
1,396
803,692
685,879
-
-
-
803,692
(32,746)
-
-
-
-
685,879
(35,074)
(1,396)
Estimated maintenance capital expenditures 1
(159,838)
(167,409)
(204,243)
(240,419)
(221,058)
Distributable Cash Flow
Distributions paid to partners
Distribution Coverage Ratio
$ 420,941
$ 508,280
$ 502,798
$ 530,527
$ 428,351
$ 240,812
$ 247,915
$ 346,799
$ 317,626
$ 288,439
1.75
2.05
1.45
1.67
1.49
1 Our maintenance capital expenditures, as defined under the terms of our partnership agreement, are those capital expenditures required to maintain, over the long-term, the operating capacity of our capital assets.
We estimate maintenance capital expenditures on an annual basis based upon a five-year planning horizon.
Reconciliation of GAAP “Operating Expenses” to non-GAAP “Segment Adjusted EBITDA
Expense per ton”
(in thousands, except per ton data)
Operating expense
Outside coal purchases
Other income
Segment Adjusted EBITDA Expense
Divided by tons sold
Year Ended December 31
2017
2016
2015
2014
2013
$ 1,095,167
$ 1,124,848
$ 1,386,783
$ 1,383,360
$ 1,398,763
-
(2,980)
1,514
(725)
327
(955)
14
(1,566)
2,030
(1,891)
$ 1,092,187
$ 1,125,637
$ 1,386,155
$ 1,381,808
$ 1,398,902
37,824
36,680
40,247
39,731
38,835
Segment Adjusted EBITDA Expense per ton
$ 28.88
$ 30.69
$ 34.44
$ 34.78
$ 36.02
Reconciliation of non-GAAP “Adjusted EBITDA” to “Segment Adjusted EBITDA” and “Segment
Adjusted EBITDA per ton”
(in thousands, except per ton data)
Adjusted EBITDA (see above reconciliation)
General and Administrative expense
Segment Adjusted EBITDA
Divided by tons sold
Segment Adjusted EBITDA per ton
Year Ended December 31
2017
2016
2015
2014
2013
$ 620,831
$ 706,719
$ 737,451
$ 803,692
$ 685,879
61,760
72,529
67,484
72,552
63,697
$ 682,591
$ 779,248
$ 804,935
$ 876,244
$ 749,576
37,824
36,680
40,247
39,731
38,835
$ 18.05
$ 21.24
$ 20.00
$ 22.05
$ 19.30
Partnership Tax Details
Unitholders are partners in the partnership and receive quarterly
cash distributions. Cash distributions generally are not taxable as
long as the individual unitholder’s tax basis remains above zero.
A partnership generally is not subject to federal or state income
tax. The annual income, gains, losses, deductions or credits
of the partnership flow through to the unitholders, who are
required to report their allocated share of these amounts on
their individual tax returns, as though the unitholder had
incurred these items directly.
Schedule K-1
Unitholders of record receive Schedule K-1 packages that
summarize their allocated share of the partnership’s reportable
tax items for the fiscal year. It is important to note that cash
distributions received should not be reported as taxable income.
Only the amounts provided on the Schedule K-1 should be
entered on each unitholder’s tax return.
Schedule K-1 information also is available on our web sites.
Please visit www.arlp.com and www.ahgp.com.
Unitholders should refer questions regarding their
Schedule K-1 as follows:
By Mail
K-1 Support
P.O. Box 799060
Dallas, TX 75379-9060
By Phone/Fax
Alliance Resource Partners, L.P.
Phone (800) 485-6875 Fax (866) 554-3842
Alliance Holdings GP, L.P.
Phone (866) 867-4060 Fax (866) 554-3842
Transfer Agent and Registrar
Direct requests regarding transfer of units, lost certificates,
lost distribution checks or address changes to:
American Stock Transfer and Trust Company
Attn: Shareholder Services
59 Maiden Lane – Plaza Level
New York, NY 10038
(800) 937-5449
Investor Information and Form 10-K
For more information or free copies of the 2017 Form 10-K,
please contact the appropriate e-mail address or phone number
listed below. Form 10-K also may be downloaded from the
Partnerships’ web sites.
Alliance Resource Partners, L.P.
investorrelations@arlp.com
E-mail:
Phone:
(918) 295-7674
Web site: www.arlp.com
Alliance Holdings GP, L.P.
investorrelations@ahgp.com
E-mail:
Phone:
(918) 295-1415
Web site: www.ahgp.com
Executive Officers & Directors
ARLP
AHGP
Joseph W. Craft III
President, Chief Executive Officer, and
Director of ARLP and AHGP, and Chairman
of the Board of AHGP
Brian L. Cantrell
Senior Vice President and
Chief Financial Officer
R. Eberley Davis
Senior Vice President,
General Counsel and Secretary
Robert G. Sachse
Executive Vice President
Charles R. Wesley
Executive Vice President
and Director
Timothy J. Whelan
Senior Vice President,
Sales and Marketing
Thomas M. Wynne
Senior Vice President and
Chief Operating Officer
Nick Carter
Director, member of the Audit,
Compensation and Conflicts
Committees for ARLP
John P. Neafsey
Director, Chairman of the
Board of Directors, Chairman of the
Conflicts Committee, and member of the
Audit and Compensation Committees
John H. Robinson
Director, Chairman of the Compensation
Committee, and member of the Audit and
Conflicts Committees
Wilson M. Torrence
Director, Chairman of the Audit Committee
for ARLP and AHGP and member of the
ARLP Compensation Committee
Thomas M. Davidson, Sr.
Director, Chairman of the Conflicts
Committee and member of the
Audit Committee
Robert J. Druten
Director and member of the Audit and
Conflicts Committees
General Information
The following information applies to
Alliance Resource Partners, L.P. (ARLP)
and Alliance Holdings GP, L.P. (AHGP)
unless specified otherwise.
Partnership Offices
1717 South Boulder Avenue, Suite 400
Tulsa, OK 74119
(918) 295-7600
Partnership Mailing Address
P.O. Box 22027
Tulsa, OK 74121-2027
Contact
Brian L. Cantrell
Senior Vice President and
Chief Financial Officer
(918) 295-7674
brian.cantrell@arlp.com
Business Structure
Publicly traded master limited partnership.
Common Unit Trading
Common units are traded on the NASDAQ
Global Select Market.
NASDAQ Ticker Symbols
Alliance Resource Partners, L.P. (ARLP)
Alliance Holdings GP, L.P. (AHGP)
Common Units Outstanding
at 02/23/2018
ARLP 130,903,256 common units
AHGP 59,863,000 common units
Independent Auditors
Ernst & Young LLP
1700 One Williams Center
Tulsa, OK 74172
Unitholder Information
Cash Distributions
The partnerships expect to make quarterly
distributions to unitholders of record on the
applicable record dates according to the
following schedules:
Alliance Resource Partners, L.P.
Within 45 days after the end of each March,
June, September and December.
Alliance Holdings GP, L.P.
Within 50 days after the end of each March,
June, September and December.
P.O. Box 22027, Tulsa, Oklahoma 74121-2027 | www.arlp.com | www.ahgp.com