Greetings, welcome to the Alliance Resource Partners, LP Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Brian Cantrell, Senior Vice President and Chief Financial Officer. Thank you. You may begin. Thank you, Daryl, and welcome everyone. Earlier this morning, Alliance Resource Partners released its third quarter 2021 financial and operating results, and will now discuss these results as well as our perspective on market conditions and outlook. Following our prepared remarks, we'll open the call to 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 that are 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 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'll 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 on Form 8-K. With the required preliminaries out of the way, I'll begin with a review of our results for the quarter, and then turn the call over to Joe Craft, our Chairman, President, and Chief Executive Officer, for his comments. The exceptional performance delivered by Alliance through the first half of the year continued into the 2021 quarter. As we reported earlier this morning, ARLP again posted sequential increases to total revenues, net income, EBITDA, and free cash flow. Strong performance from both our coal operations and our royalty segments led total revenues higher by $53 million to $414.4 million, with net income increasing $13.5 million to $57.5 million, or $0.44 per unit, and EBITDA climbing $17.3 million to $135.9 million. Free cash flow also rose during the 2021 quarter, increasing $40.3 million to $119.7 million. ARLP's strong cash flow performance during the 2021 quarter allowed us to return $12.7 million to unit holders through the quarterly distribution we paid in August, and further improve our balance sheet as total leverage fell to 0.95x, a 12% reduction from the sequential quarter, and liquidity increased $102.1 million to $602.6 million. ARLP's financial and operating results for the 2021 quarter and the first nine months of 2021 were also much improved compared to the 2020 quarter and period. Compared to the 2020 quarter, total revenues increased 16.8% as a result of higher coal sales volumes and significantly higher oil and gas prices, while net income jumped 111.4% and EBITDA climbed 14.4%. Compared to the 2020 period, coal sales volumes increased 15% during the 2021 period, driving total revenues higher by 14% to $1.1 billion. Coal production volumes also increased during the 2021 period, jumping 20.1% to 23.5 million tons, compared to 20.1 million tons during the 2020 period. Increased coal production and the benefits of ongoing cost control and efficiency initiatives at our mining operations drove Segment Adjusted EBITDA expense per ton sold lower by 11.1% to $28.82 per ton during the 2021 period, compared to $32.43 per ton for the 2020 period. Net income increased $290.5 million to $126.3 million, reflecting higher revenues and lower depreciation in the 2021 period, and $157 million of non-cash impairment charges in the 2020 period. Excluding these impairment charges, net income of $126.3 million for the 2021 period compares to an adjusted net loss of $7.2 million for the pandemic-impacted 2020 period. EBITDA for the 2021 period increased 31.5% to $348.9 million, compared to adjusted EBITDA of $265.3 million in the 2020 period. Turning from our consolidated results, let's now take a closer look at the performance of ARLP's business segments. Reflecting strong coal demand, which led to higher sales tons and price realizations at our coal operations, coal sales revenues rose 11.1% to $362.3 million during the 2021 quarter compared to the sequential quarter. Segment Adjusted EBITDA expense increased modestly to $28.95 per ton sold, as inflationary pressures are beginning to impact our coal operations. Increased revenues more than offset higher per ton operating expenses, driving Segment Adjusted EBITDA for our coal operations up by 10.9% to $126.3 million. ARLP's royalty businesses also performed well during the 2021 quarter. For our oil and gas royalties, Segment Adjusted EBITDA during the 2021 quarter rose 24.1% to $19.1 million as sales volumes and price realizations improved compared to this sequential quarter. Benefiting from increased revenues and royalty tons sold during the 2021 quarter, ARLP's coal royalties business delivered $9.2 million of Segment Adjusted EBITDA, an increase of 35.6% compared to this sequential quarter. The strong performance of both of these businesses resulted in ARLP's total royalty segment posting a record $28.3 million of Segment Adjusted EBITDA during the 2021 quarter. With that, I'll now turn the call over to Joe for his comments. Joe? Thank you, Brian, and welcome everyone. Since our last earnings call, fossil fuel prices have increased dramatically around the world as supply has fallen woefully short of demand. Since the beginning of this year, worldwide LNG prices have escalated fourfold in Asia and Europe. The API2 index for thermal coal prices has more than doubled as weather impacted unreliable renewable power generation did not show up at expected levels, and utilities increasingly turn to coal in response to high natural gas prices. In the U.S., natural gas prices have nearly doubled, causing coal fire generation in ARLP's primary markets to jump 23% year-over-year. Coal generation could have been even higher. However, supply has been limited due to numerous issues, almost none of which should be attributed to the producers of America's most abundant low-cost fuel, coal. Looking forward, the Biden administration's domestic energy policy agenda, combined with ESG obsessions in Europe and the United States, will most likely continue to restrict growth in fossil fuel production. Absent any significant global demand disruption, we expect fossil fuel prices will remain at elevated levels through next year and into 2023. We have benefited from the market uplift this year as reflected in our updated full year 2021 coal sales guidance. Assuming no delivery delays through the end of this year, coal sales volumes will be 15% higher than the pandemic impacted 2020 levels. As natural gas prices are projected to remain favorable for coal generation next year and coal stocks for our customers are at critically low levels, we are currently targeting a 6%-12% increase in coal sales volumes in 2022 over 2021 levels to help meet the needs of the marketplace. ARLP has responded to rising coal demand. Our employees are working extra hours to increase current production, and our mining operations are focused on retaining ARLP's exceptional workforce and attracting new employees to further increase coal production. ARLP's customers are rewarding us for our efforts to meet their needs during this critical time, providing new commitments during the 2021 quarter for the delivery of 2.1 million tons over the balance of this year. ARLP is now sold out for 2021, and as a result of recent contract pricing, we are increasing our estimated full year coal price realization by $1.10 per ton sold for this year. During the 2021 quarter, we also strengthened our long-term coal contract book, entering into new contracts for the delivery of another 13.2 million tons over the 2022 through 2024 timeframe. Since the end of the 2021 quarter, securing new agreements for the delivery of an additional 10.7 million tons over the same three-year period. As of today, we have 29.9 million tons committed and priced for 2022. Of which 2.4 million tons are committed to the thermal export market for delivery next year. ARLP has secured commitments for approximately 4 million tons of export sales in 2021, including 440,000 tons of metallurgical coal. We expect strong international demand for both thermal and metallurgical coal will continue into 2022, providing ARLP with the opportunity to place similar volumes, if not more, in the export markets at attractive prices next year. In 2023, we have price commitments for 15.8 million tons, all in the domestic market. Market fundamentals for ARLP's royalty segment are also favorable. For our oil and gas royalties business, commodity prices have increased significantly since the beginning of the year, and the forward price curve for oil, natural gas, and gas liquids remains very favorable. Production from our existing acreage continues to improve from pandemic lows. We expect that trend to continue as E&P operators modestly increase drilling and completion activity, and we anticipate the contribution from oil and gas royalties to ARLP's consolidated results will also increase as a result of our recent acquisition of approximately 1,500 net royalty acres in the Delaware portion of the Permian Basin. With the active development already underway and a significant inventory of wells to be ultimately completed on the acquired acreage, this transaction should provide a long-term uplift to the performance of our oil and gas royalties business. We also anticipate steady growth from our coal royalties business as increased coal sales volumes and prices from ARLP's mining operations should benefit this part of our business as well. As a result, we expect the contribution of our total royalty segment to ARLP's consolidated results will continue to increase in the future. In closing, I want to address our thoughts on setting unitholder distributions. After suspending unitholder distributions in response to the challenges and uncertainties created by the pandemic, ARLP's performance and outlook had improved to the point that we were pleased to reinstate unitholder distributions earlier this year, targeting an annualized distribution level at approximately 30% of anticipated full-year Free Cash Flow at the time. ARLP's performance since then has obviously been exceptional, well above our expectations. The positive future outlook for energy market fundamentals contributed to the Board's decision this quarter to double the distribution to our unitholders compared to the sequential quarter. As I just mentioned, coal, oil, and natural gas market fundamentals appear to be extremely favorable for the next several years. With our long-lived, low-cost, strategically located assets, ARLP is well-positioned to deliver solid results for the foreseeable future. We continue to believe we are well-positioned to provide attractive cash returns to our unitholders and provide ARLP with the flexibility to pursue long-term growth opportunities while maintaining a conservative balance sheet. While ARLP is aggressively pursuing opportunities to benefit from current market conditions, we are also aware that significant uncertainties remain. The same market environment that is so favorable to ARLP's business today should also serve as a wake-up call to politicians, regulators, financial institutions, utilities, and customers or consumers as they contemplate the future. Policies favoring a rapid movement away from reliable baseload generating capacity to an ever-increasing premature reliance on intermittent power sources have already resulted in power disruptions in the U.S. and energy crisis in Europe and power shortages in China and India. We are hopeful that as the energy transition continues to evolve, it will do so in a way that not only continues to push new technologies and innovation, but also with an honest recognition of the pace at which this can be deployed. This requires an acknowledgment by these policymakers of the importance of coal-fired power generation in order to maintain access to low-cost, reliable power until the transition is completed sometime over the next several decades. As the future of energy continues to evolve, ARLP intends to be there for our customers, providing the fuel essential to meeting their needs today and profitably investing in opportunities that will help them keep the lights on in the future. That concludes our prepared comments, and I'll now ask the operator to open the call for questions. Thank you. We will now be conducting the question and answer. If you would like to ask a question, 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 you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for your question. Our first questions come from the line of Nathan Martin with The Benchmark Company. Please proceed with your questions. Thank you. Good morning, Joe, Brian. Congrats on the quarter. Thanks, Nate. Appreciate it. Coal production, I'd say, came in a little lighter than expected. I'm guessing that's driven the decrease in full-year shipment guidance. Given the strong market we're seeing, as you guys pointed out, too, most probably weren't expecting a downward revision. Obviously, even the revised guidance looks like it would imply a very strong fourth quarter on both the production and shipment side. Could you guys maybe talk about the factors leading to that change? Is labor a factor at all there? You also mentioned some issues maybe with delivery delays affecting that. Maybe a little color there. Kind of looking ahead to 2022, I think I caught you guys said that shipments should be up about 6%-12% year-over-year. Can you give us an idea how you plan to increase tons there? Thank you. Sure. Yes. Shipments were definitely impacted by some supply chain issues from the transportation sector to where we had some planned shipments that did not occur because of the unavailability of transportation equipment. We continue to see that as a challenge going forward. We do expect to hit our guidance with 4th quarter shipments, assuming the transportation shows up. At this time, we have commitments that will happen, but we'll have to wait and see on that. As far as our production, COVID still has impacted our operations. We did have quite a few employees that were off this past quarter that impacted production somewhat. Not significantly, but it did account for some of that shortfall. We're working extra time this quarter to try to make sure that we can achieve our objectives for the year. We are working extra days on the weekends to try to meet that objective. In addition, starting next week, we've added a unit of production at our MC Mining operation in Appalachia that will be fully staffed and producing some additional tons in the fourth quarter going into next year. We are looking at adding some production next year. That'll be driven primarily by, again, working extra hours and extra days, as well as maybe adding a few units. That 6%-12% will be largely dependent on labor force and supply chain. We feel good about having the equipment based on what we have within our operations, that's going to be an availability issue for most people, but not for us as far as the equipment availability I'm speaking of. Labor, we are feeling good about our ability to attract labor since we have commitments that are starting to grow over the next three years, and strong support from our domestic customers that have given us sufficient signals to provide the confidence to try to bring on a unit or two. That growth right now is probably 2/3, mostly in the Illinois Basin is basically where the growth is, except for the MC Mining that I spoke of earlier. I think that answers your questions unless there's a follow-up. Yes, Joe. No, I appreciate the color there. Absolutely. If I may kind of shift it over to the pricing side of the equation. It looks like here in this year in 2021, you guys layered on nearly 1 million tons. Pretty strong pricing levels. Obviously, your full-year guidance moved up by, looks like about $1.60 at the midpoint. If you look at 2022, it looks like you basically doubled your committed and priced tons there. Now that you guys have such a significant portion of 2022 locked in, can you give us any idea how pricing looks like for 2022? Well, given the UI we have, it's hard to give you a price target. I'd say that there's still uncertainties there. Prices are continuing to be strong. We are booking some at very attractive prices relative to what this year's prices are. At the same time, there was quite a bit of tonnage that we booked that was earlier in the cycle. We haven't been able to time everything at the top of the market, but it's safe to say that we expect revenues to be higher next year. I can't give you a precise number right now, but we feel like next year, 2022, is going to be a very attractive year relative to what we've seen in the last two or three years. Got it. I appreciate that, Joe. Then just maybe one final question. I know I asked you last quarter for your thoughts on free cash flow allocation. I think you said you'd be in a better position to answer that on the next call. Obviously, you guys felt strongly enough about what you're seeing in the markets to increase, double the distribution, really. You also added some acreage on the oil and gas side. I understand there's some uncertainty out there still, as you mentioned in your prepared remarks, but maybe any other color you can provide on what your priorities are from a capital allocation standpoint or with the potential step up in free cash that you guys could see next year. Thanks. I think one of the uncertainties or a headwind that we're looking at is just what the Biden administration's going to do. They promoted these infrastructure bills, which on the one hand, tries to encourage workers with what we call true infrastructure, and then they've got a social infrastructure bill that tends to ask people not to work. I don't know what's going to happen there. It's just amazing to me that for two or three months, they stick with one particular type bill, and then all of a sudden, everything's changing and nobody really knows what is going to be in the bill or what the impact's going to be. I think the positive news for people in the coal business, it looks like Senator Manchin's been successful in keeping out some of the draconian measures that were in the earlier bills. We really need to see what in the world comes out of the Biden administration this quarter heading into 2022, and what their reaction's going to be relative to whether it be legislation incentivizing alternatives. More importantly, what position are they going to take towards our financial institutions and the access to capital? There have been signs recently that the Federal Reserve has been encouraging the banks not to lend to the coal industry. We need to really assess how the Biden administration handles the rest of the year as we think about how we allocate capital going into 2022 and beyond. I think the fundamentals are very strong. We're seeing a lot of opportunities in the oil and gas sector. We're continuing to evaluate things in the transition. Most of those things appear to have a little longer lead time instead of immediate type acquisitions. We're continuing to spend quite a bit of time looking in that area. Our challenges, like most people now, are supply chain shortages, transportation shortages, weather, the economy, Biden regulations, inflation is a big one. COVID. What's the pandemic going to do? Is it going to subside, or are we going to see another wave? There are just a lot of different issues in front of us, but we feel like we're well-positioned to manage those going forward. I wish I had better clarity, but like I said, insistence on trying to pass this legislation at a time when there's already a worker shortage, I don't know how that's going to shake out. Got it, Joe. I appreciate those comments, and obviously all the variables there. Just real quick, just to follow on the labor side of things and then the inflation that you just pointed out as well that you guys are seeing. Any thoughts on what that might add on the cost side going into next year? Well, we're hoping that our productivity improvements will offset those increases, but there's definitely inflationary pressure with steel prices, natural gas prices, oil prices. Labor component's small relative to some of the others that are double digit in prices. We think our margins will expand next year based on the benefit of higher revenues that will more than offset any cost increases. Perfect. I think that's all I have for now. Thank you guys, as always, for the time. Best of luck in the fourth quarter. Appreciate it, Nate. Thank you. Our next questions come from the line of Lin Shen with HITE. Please proceed with your question. Hey, good morning. Thanks for taking my call. It's a great quarter. I'm just wondering, some of the peers talk about they set a target to reduce their direct operating greenhouse gas emission target. I'm just wondering for Alliance, is there such an approach, or is there anything you can working on, you think, some low hanging fruit you can do for maybe improve your ESG? I'm not sure. I mean, it didn't come very clear to me what your question. Could you repeat the question? Just like some company, coal company talk about they're working on to reduce their greenhouse gas emission for their operations. I'm just wondering, is Alliance also working on some approach to reduce your greenhouse gas emission for your operations or some other work like that? Yeah. We're constantly looking at efficiency opportunities. We've also made some small investments in some offsets, carbon offsets on methane emissions from closed operations, which we're continuing to look at. We're looking at other credits also, potentially in the forest areas, timber area. That'd be my response to that. Brian, do you have anything more? No, not yet. You don't see any near-term big opportunity for you to invest something like a Carbon Capture CCUS credit, or you don't foresee any near-term opportunities being there? I think the Carbon Capture would be more on the consumption side, not on the operating side. At the utility level. I don't really see anything in the near term on that from our existing customer base. Got it. I also want to follow up. When you look at 2022, do you think about you probably will export more than 2021? What do you think about export market for 2022? We do believe the export market is going to be constructive. It's going to be robust. It will be there for us. I think what we have to balance is what are the demands for our domestic customers. It's going to be a matter of communication and commitment. We have for the longest time really rely on our domestic base, and I think if we're asking our customers for new commitments to commit for three years, and if they would commit for three years, I think our preference would be to serve that market as opposed to be in the export market on a short-term basis. On the other hand, we've got some export customers that are willing to contract or commit multiple years also. We're looking for long-term supply so that we can support bringing on the additional people to meet those needs. Okay, great. Thank you very much. Appreciate it. It could be higher, it could be lower, depending on what the domestic market brings. Great. Thank you. Thank you. Our next question has come from the line of Shelly McNulty with Loomis. Please proceed with your questions. Hi, thanks. Yeah, I just wanted to go back to your comments about kind of waiting on the Biden administration and kind of concerning comments from the Fed in regards to advising banks not to lend to coal. Is that kind of, at this point, prohibiting you from being able to come to refinance your bonds that are callable? Would you characterize it as stopping you from doing it at this point? If you wanted to refi tomorrow, do you have banks that would be willing to act as your agent? Yeah. We think the markets are open today. It's not a today issue. It's trying to think through what our access to capital will be from the banks in particular when our revolver renews in a couple of years. That's the primary concern right now. I think the bonds, where interest rates are and where the strength of our balance sheet is, we've gotten some favorable responses currently. There's just an uncertainty there that just puts a premium on us to have a strong balance sheet. It's hard to know three years from now where the markets are going to be given how fast they've gone up. Will there be a balance or not? I'm a believer that we're going to have this supply chain disruption for a while. I just don't see anything changing that, especially if the Biden administration passes this second slug of $2 trillion that puts money in people's pockets and encourages them not to work. If people don't show up to drive trucks at the ports or anywhere throughout the supply chain of our economy, I'm just very concerned that we're going to continue to have a lot of disruption in the supply side of the business. It could go to anything and everything. That's an area that we're not immune to having just products coming to the coal mine, as an example. It affects everything throughout the economic food chain here. I think the policies really need to be focused on what's good for the economy as opposed to the 2022 election, which in my opinion, is what's driving their urgency to try to get something passed. It has nothing to do with what's right for America, in my opinion. We just have to wait and see. I can't. I got it. Then for your exported tons, what is the major market that you're exporting to at this point? We have markets to India and some to Europe, and some to Middle East. A little bit to the Far East, not a lot. What's the kind of break even that you need to see to make the margin more attractive on the export side? The price is there. The price markers are there. It's just a matter of whether we should be selling into the export market or the domestic market. We're further challenged by the fact that we really have no supply to sell for the next two quarters, and maybe three. When we're looking at what participation we would have in the export market, unless we can bring on these additional tons, we're looking at the second half of next year, and a lot can happen in that price curve compared to where we are today. I still believe that there's definitely going to be opportunity from a price standpoint for us to sell into that market. It's really just a matter of where the domestic customers, would they prefer to have the ton stay in America, or are they not willing to commit a longer term? If they don't, then we'll probably end up turning to the export market. Mm-hmm. On the shipments that got impacted by logistical issues, that I would assume mostly just impacted the domestic shipments, not your exported shipments. If you can't move the tons because of the domestic freight or whatnot, can you kind of move them into the export market quickly on a spot basis just to kind of get those tons out? Or how does that work? Yeah. The transportation's going to be impacting both domestic and export at the same time. Okay. There's only so many train crews. They're having employee work issues also trying to fill their seats on their train. Most of it's a labor issue for the railroads. You've got the vessels on the seas that, it's a logistics timing issue. Again, our challenge in America is most producers are all sold out. Yeah. To take full advantage of these high prices that you see in the near term. Okay. The ability to restock inventory for next year is kind of limited in the sense that some of the capacity that closed during the pandemic, is it able to quickly restart, or has there been too much domestic coal capacity permanently shut because of the rhetoric of, we don't want the coal anymore? Is it ever going to be possible for the utilities to restock inventory levels to a point where we have a good cushion? Yeah. I know that's dependent on the policy, too. Are they wanting to restock, or are they comfortable with operating at these levels of inventory? Have they had a mindset change? Yeah, utilities would love to be restocking right now. They're more focused on just maintaining getting the coal that they've got under contract so that they're prepared for the winter without having to run out of coal. They're very low. The lowest I've seen in a long time. Everybody's focused on trying to make sure we meet the commitments that they've made. I think as to far as restocking, from a producer standpoint, yes, the pandemic did impact coal production by 20%. Once you close those operations, it is tough to bring them back. I think that thinking of new operations, I know there's a couple of people out there trying to do it, but most of what we see of new production's all metallurgical coal. There's just been an abandonment by most producers of the thermal business. We're one of the very few that's committed to the thermal business for the life of the power plants through 2035, 2040, 2045. It's hard for people to get financing to open new thermal mines. I just don't see it happening. There is excess capacity because of the pandemic for people like us to where we don't have to make large investments. We just have to hire people to get to full capacity. I think that's what most other people will be doing. Most other people that are in the thermal business are doing it the way we're doing it, and that's really just working extra hours and trying to increase their production that way, as opposed to thinking about making capital investments that would bring on supply that would have an overhang in the future. Thank you. Our next questions come from the line of Matthew Fields with Bank of America. Hi. I just wanted to ask about kind of the strong balance sheet that you sort of highlighted that that's sort of a continuing priority for you. Pre-pandemic, you had always kind of talked about one turn of leverage as that kind of comfortable level. Now as we get sort of into a more favorable environment for you and you're starting to increase the distribution, we're kind of at that one turn of leverage. I wanted to get a sense of where you are at this inflection point of balancing the balance sheet versus shareholder interest and kind of where you want to see the balance sheet maintained as you kind of try to address shareholders that haven't had their distribution in a while? I think the objective is the same. I think our next year, probably because EBITDA is going to be higher, you're going to see that drop below that. Our concern is 2023. There's a lot of plants that are scheduled to close in the coal space. We need to see, again, what the Biden policies do, not only legislatively, but from a regulatory standpoint as to whether or not these coal plants will stay up longer or whether they'll close faster. When we're trying to think about the transition, we need to be able to continue to make acquisitions so that our EBITDA will grow from things other than coal, so that as we look to 2030, 2035, that our company has strong growth for the long term, instead of trying to think that the coal business is going to be around for the next 50 years, which would allow us to return to coverage ratios like we've had when we had more security, that we had a longer runway. I think both the access to capital and the future demand for our product are two major issues that influence what our reserves have to be so that we can have the ability to have a strong balance sheet so that we can survive in no matter what environment is presented to us, but at the same time, still be able to return sufficient amount of cash to the shareholders, which I support strongly as a major shareholder. We have to be prudent in looking not only for the short term, but for the intermediate term and the challenges our industry faces. As I said in my prepared remarks, I'm hopeful that our policymakers would accept the fact that you can't replace fossil fuels overnight. I don't know why the financial community thinks that we can. I don't know why they can't see the need to finance fossil fuels through the transition, as opposed to saying, "Well, I know the transition's going to occur till 2035, 2040, but I'm going to stop lending to you tomorrow." That just doesn't make sense to me. Unfortunately, there are banks out there that are taking that position. It influences how we can think about our balance sheet, and therefore, we can't use leverage like most other industries can. When you look at our balance sheet, it is conservative relative to others because we do have lenders that are shying away from the coal word, unfortunately. Not at the risk of oversimplifying, it sounds like trying to play some offense and defense with offense being the royalty business and then defense being kind of your strong balance sheet to, in the absence of information on what the regulatory and legislative policy is going to be. Maybe that one turn of leverage, which was of a pre-pandemic level. Are you saying, I don't want to put words in your mouth. Yeah. Is $450 million of debt too much right now? No. No. No. We think that that's very doable, and we could even take on some more. Okay. What I'm trying to say is we look at different scenarios, and we feel very good about the next four or five years. If markets were working, we would be having a totally different conversation. Unfortunately, we've got government interference in markets, and it goes through everything we do, whether it's a FERC, whether it's the Fed, whether it's the regulatory. There's constantly, whether it's the legislative giving wind and solar all these tax credits when they don't need them. They say they don't need them, and yet the government keeps throwing. They want to throw the $300 billion at them according to the last thing I read. Some people tell me that it's really going up to $600 over 20 years. When it was one year, now all of a sudden they think that they need to do it for 10 years. What's that all about? We feel like we can sustain $500 million-$600 million of debt. At the same time, we need to see how these policies impact other people's behavior. It's not what we can support, it's what we can borrow at a reasonable price. It's what the financial institutions will allow us to do. Yeah. Practically speaking, does that mean that you're going to have to hold more cash on your balance sheet and depend less on a revolver, which may or may not be as available to you after 2023? We're in the process of looking at alternative markets, and there are some. There are people out there that see the strong credit and realize that we're going to be there for the next 20 years and that we're a solid credit. There are alternatives that we're looking at. We just don't have a good idea of what the pricing's going to be two years from now as opposed to the pricing today. It's attractive today, but we don't need the money today. We need it a couple of years from now when our revolver. Are you talking about going into the private debt market or a sort of a private revolver with a non-bank institution? Yeah, the latter. Okay. That's very interesting. I appreciate it, and good luck the rest of this year and next. Thank you. Thank you. Thank you. Our next question has come from the line of Scott Ferguson with Pacific Value. Please proceed with your questions. Hi, guys. Morning, Scott. Just a couple questions. I'll just rattle them off and let you go. I know you guys touched on this in an earlier question, but just ballpark the amount of tonnage you guys have booked for next year. How much was booked before this recent price run-up? Secondly, you guys in the past have mentioned investments that you guys were close to pulling the trigger or were looking at that were outside of oil and gas. Are those still on the table, and potential timing? Thanks, guys. Yeah. As far as the booking of business, I'd say that most of this was really pretty ratable ever since our last call. We booked some in August, September, October. I'd say it's probably a third, a third, a third. I don't know. Maybe it's something in that neighborhood, would be what I would guess. I haven't really looked at it that way, I would say that it's probably in that zip code of a third, a third, a third maybe. Yeah. I don't know, Brian. No, that's about right. I think if you look at our committed tons at the end of the third quarter compared to the end of the second quarter, we about doubled it this quarter. As we mentioned in the call, since the end of the third quarter, we've booked another 10.7 million tons of volumes. Tough to time the market, obviously. I think Joe's characterization of we are constantly in the market, we're constantly booking agreements at pricing that's attractive at that time. We've definitely caught some of the uplift. The fact that we were able to increase our full-year sales price realizations by $1.10 in one quarter speaks to that. It has been occurring on a more ratable basis. We increased last quarter also in anticipation of some of that. Our revenue is up over $150 million, I think, for the year. We were able to capture some of that before the July call, and then we add some after. As far as the acquisitions non-fossil, what we've looked at in some of the transition type investments, we're seeing significant inflation in some of the fundamental elements to go into different aspects of the various different alternatives that we've been looking at. We still have most of the products are actually supplied from overseas, from China. There's still been some issues on what the tariffs are going to be and not be. As we see the economics of what has driven the growth in some of those renewable spaces looking forward, it appears to us that the costs are going to be higher, but we haven't seen a desire on PPAs as an example of adjusting to that. We've also sort of formed a view that if there's going to be a fast acceleration towards wind, solar, batteries, then we think that prices are going to be better and a little later than they are today. It may be prudent to wait a while before jumping into that space, especially if there's 10-year tax credits instead of one-year tax credits. Much of what was driving a one-year deal was we're trying to do something sooner than later. It was because tax credits were expiring. It sounds like they're going to get extended. To me, that takes some of the urgency off and allows for participation at a better entry point than trying to do something sooner compared to later. Thank you. Our next question comes from the line of Arthur Calavritinos with ANC Capital. Please proceed with your questions. Thank you very much, guys. Hi. It's great to see these numbers in black and white. Good for you and good for us. Thank you. Question I have, Joe. I'm reading all this stuff in India, three days worth of supply. Spain is a disaster. England had to turn on a coal plant, which they were basically going to blow up, but they've realized the wind doesn't blow and all this other stuff. I was wondering if those guys have to take their inventories up worldwide. They're realizing it now. What does that mean for you? You made a statement earlier which caught my attention when you said you'd rather keep the coal domestically because you want three-year contracts, I get that. At some point, I got to think the guys in India, pick a country, are going to be like, "We're going to play and we're going to do the three-year contracts," or something like that. I'm sure you're probably getting phone calls from those guys. How does this play out? I just got to think your phone's going to be ringing off the hook with guys are finally saying, "Okay, I'm not going to do a one year or less than a year contract. I want to go longer for a certain price." If you run out of electricity in India, the guy running the utility is going to get killed, right? In all these countries. I don't think the guys even people get what's going on out there. Just if you could just expand on that. Yeah. A couple of things. As I mentioned earlier, we are having conversation with some export customers that are willing to commit longer term. Back to your point. Is that news to them? Is that like, did they finally acquiesce and okay? Well. That's the new paradigm? Yeah. This year, we actually had a customer that committed for a full year. Normally they're quarter to quarter, vessel by vessel. Right. Is what we participated in. This year, we've had actually two customers that have committed for longer term within a year. Now we're talking about even longer. Okay. I think when you look at Europe, you're exactly right. It should be a wake-up call. What we're seeing is now you've got oil replacing natural gas. These guys are trying to scramble around to try to make sure that people have enough gas for the winter. I've never seen anything like it, is all I can say. Go ahead. Sorry. Go ahead. I'm sorry. Go ahead. Yeah. We're very focused on trying to take full benefit of what the markets give us, but we feel that our best policy is to really think longer term than short term. Okay. Given the headwinds facing our coal industry, politically, like I've mentioned before. Oh, no. Look, I don't know what the industry would've been like if you took the pro forma closures for 2023 and you had them this year, right? Right. Then those electrons got substituted by nat gas. I'm in Boston. Nat gas in Maine is at the terminus there is like $20, right? We're at $5.50 on the Cushing. Guys still don't get this because they look at gasoline in terms of what energy costs are rather than electricity until it hits, which is going to start hitting in about two or three months. Yeah. Can you get work? I've talked to energy guys, and one of the things that's come back from some utility guys, what they're worried about is the ability, you guys being able to get workers, an extra shift, restart a mine. I'm sure there's a lot of guys that even though the pay would be greater, probably wouldn't want to go back because they're like, "I can make more money for a year." The administration and all the talk is coal's going away. I'd rather make less money and have more certainty in what I'm doing than just mine coal for a year. I'm just wondering how tough it is. Yeah. That's why it's important to get long-term contracts, so that we can not only talk about it, but reinforce it with commitment. There's potential that we could have some even longer-term contracts that we're in conversations with right now. One of the things, I may have mentioned this. I've had so many calls, I don't know which call, whether it's last quarter or not, but we had one customer that actually came to our coal mines and talked to our men saying, "We need you. We need you for 15 years. At a minimum, that's how long our plants are going to run, so we appreciate what you do. Even though we can't commit for 15 years contractually because of company policy, but we're here to tell you that we need you." That was very impactful. What we've seen is with the fortunes that have turned and with the price signals that we have and the opportunity to reposition our pay policies in a way that make it more attractive. People have had a taste of going to a manufacturing job that is the same thing every day, whereas they come to a coal mine, it's different every day. Every day they work, they're working in a different place. We've had great success. We've hired over 150 people in the last quarter that had left us earlier in the year. Wow. Because they see the opportunity over the next several years. Okay. As I mentioned, we were just able to recruit two shifts in Eastern Kentucky, which is amazing given the fact that we're competing against metallurgical coal guys that are trying to hire the same folks. We've got great benefits. We've got great culture. We've got great people. We feel if anybody can hire employees, it's us. We feel that, I'm sure there's other of our competitors feel the same way. Like I said, we've been able to hire that many people just in the last quarter, given the strength of these three-year contracts that we've been able to secure during that time. At the same time, if Biden comes out and decides to pay people more money to stay at home. Yeah. Not everybody became a computer coder. The two administrations ago said all the coal miners were going to become computer programmers. Yeah. Right. Yeah. Let me ask you one other thing. You said something, too, when the utilities, if they mothball a coal plant, and to restart it doesn't happen overnight. You made a statement like that earlier on the remarks. Those were coal mines, not the utility. No. Okay, got it. It was the mines. Not the utilities. I think once a coal plant is offline, it's very unlikely that it'll start back up. Having said that, there is a plant in the U.K. that they went back and brought. Out of mothballs. Yeah. Yeah. It's unlikely that you'll see any coal plant that's been closed brought back into service until the policies change. It's at that level. I'm sorry. Yeah. Unless the government says, "We need you," like they did in 1970s when we had an energy crisis here. Do you think, and I'll ask, and then I'll take it with you guys offline. I kind of think there's got to be a price on nat gas, electricity, eventually, that gets people to get off your back and realize what's going on. Plus, I think with the Uri super storm, the cold storm in the event in Texas, in Houston, to me, that would've been a wake-up call, but it seems like we've forgotten about it. As I think about it, and you think about it, is there a price where people, the electricity bills, like I said, they haven't been reset yet for the rates? They're starting to, but they haven't fully, and plus we're in a seasonal low, that that's the wake-up call? I think that eventually price drives all regulations. You'd think so. When you look at fossil fuels, mostly oil and some natural gas, what it does, it permeates through any and all products. This morning, I think it was Wall Street Journal had an article on baby diapers. Right. Showing the increase in cost of baby diapers and traced it back to lumber and oil. That's true with so many products that we use. I think that's the one thing that most people in America don't understand is all the byproducts that we use day to day that are a derivative of oil. Back to your question, I think it's going to take more than price. I think it's going to take blackouts before the politicians start to say, "Wow, I didn't know my policies were going to impact people's lives like they did in Texas," where you had over 50 people die. I'm afraid that that's what it's going to take to get the policy makers and the CEOs of banks and the BlackRocks of the world to realize that the policies we're advocating here, and they're going to China and investing over there, but they won't say a word. China's 70% coal fire generation. They got more power plants being built today than we have in existence, and they say nothing. Yeah, no. You would think that would wake up America. Yeah. No, you're right. Unfortunately, I agree with you. It's going to have to take blackouts. I'm here in the Boston area. In January or February when it's cold and where you shut down electricity to manufacturing plants. When I was a kid in the 1970s, I think that's what happened. They just shut stuff down. Even FERC sent a notice out to the grid operators in this region, and they just said, "You got to store more nat gas." It's like, "Thanks for the warning," but people don't get it yet. You're going to need blackouts in the wintertime or unfortunately something like that. Unfortunately. Okay. Unfortunately. Thank you. All right. Thank you very much, and I'll be back offline with you guys. You bet. When I'm around, I'll call you guys. Thank you. Thanks. Thank you. Our next questions come from the line of Andrew Cosgrove with Bloomberg. Please proceed with your questions. Hey, gentlemen. Thanks for taking my questions. Just one, if you could just give us an idea on where current ILB prices are today, then I guess along the same lines would be assuming, if you could expound if the new kind of range for gas, obviously prompt month is near $5, but if we were to settle somewhere closer to $3.50, what do you think the right price for ILB coal is in that environment? Yeah, I think most of the publications you see out there are showing prices in the $80-$90 range for Illinois Basin pricing today. I think that anything above $4 can support prices that high if you're just looking at coal versus gas competition. At the same time, if you start thinking about coal on coal, that would drop the price down to some other price level, which we just don't see happening in 2022. That may happen towards the end of the year, it may not. I just feel like that it's really difficult to bring on enough volume to meet the demand. As I said in my prepared remarks, if there had been enough coal supply, we would've seen more coal consumed in the fourth quarter than what we're going to see. You can get Powder River Basin in the market easier than you can the underground mines in the east. You're also facing the competition of the export market like an earlier caller talked about, that there are some folks that are looking more to just sell on the export market in the short term. I can't give you an exact price on the $350. We don't see it going to $350. It's possible it could, we'll be definitely booked up in 2022 before that happens. Right. Okay. I think the color as far as what you just said with anything over four supporting somewhere near spot is pretty telling in and of itself. I appreciate that. I guess the other one would be if you could maybe expand on any inflation on the rail side or the barge side. Maybe if you could just refresh my memory as far as how you guys move coal down to the Gulf Coast. Yeah, anything as far as what that costs today versus where it was and where it might be going. I know on the met side, for rail specifically, I guess the rule of thumb prior to what's coming up next year was around $20 a ton. Obviously, I know we're talking about different geographies, but that's going to double next year was just curious what that looks like in your guys' neck of the woods? I think on the transportation side, I don't consider it really inflation as a cost push to their pricing. Right. It's all really supply and demand as to who's going to pay what price and what movement. Who will commit. Yeah. On the domestic side, on the rail side, that's usually determined by our customers, and then they usually have long-term contracts that have pricing associated with that. When we think about pricing for domestic shipments, in large part, the customers are able to maintain those prices that may be back to your inflationary type levels. When you get into the spot market, it's just based on total supply and demand at the time you're shipping. Earlier, right now or the last 60 days, both rail and barge pricing was up quite a bit to get their fair share, as they would say, of the economic rent of the higher prices. Going forward, I think that we factored all those in as to how we look at what our cash flows would be. Again, we're going to have a very strong 2022 unless the bottom falls out of the economy. Okay. Yeah, just the last one would just be around can you just remind me where the bookings were for 2023 before 3Q? Where you exited 2Q at in 2023? I think you said you're at 15.8 million tons right now. Right. Yeah. Brian's looking that up if you got another question or if anybody else has one. Yeah. I guess the other one I think you kind of answered before, but the willingness from utilities to want to keep more coal on the ground from an inventory standpoint. I guess you guys kind of said that they're just really just trying to focus on what they've contracted out so far and what they're just focusing on those deliveries versus building up somewhat strategic stockpiles, right? Right. Yeah. That's what I think. Yeah. Since the second quarter, we booked about 8.2 million tons into 2023. Okay. All right. That's all I had. Thank you, gentlemen. I really appreciate it, and good luck the rest of the year. Thank you. Thank you. Thank you. There are no further questions at this time. I'd like to turn the call back over to Brian Cantrell for any closing remarks. Thank you, Daryl. Good discussion this morning, and we appreciate everybody's time, as well as your continued support and interest in Alliance. Our next call to discuss our fourth quarter and your full year 2021 financial and operating results is currently expected to occur in late January, and we hope you will all join us again at that time. This concludes our call for today. Thanks to everyone for your participation and continued support of ARLP. Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.