Alliance Resource Partners (ARLP) Q4 2020 Earnings Call Transcript

Alliance Resource Partners (ARLP -2.35%)
Q4 2020 Earnings Call
Feb 01, 2021, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Alliance Resource Partners fourth-quarter 2020 earnings conference call. [Operator instructions] Please note that this event is being recorded. I would now like to turn the conference over to Brian Cantrell, senior vice president and chief financial officer. Please go ahead.

Brian Cantrell -- Senior Vice President and Chief Financial Officer

Thank you, Tom, and welcome, everyone. Earlier this morning, Alliance Resource Partners released its fourth-quarter 2020 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 that are 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 or uncertainties materialize or if our underlying assumptions proven 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 statements, 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 2020 results and then turn the call over to Joe Craft, our chairman, president, and chief executive officer for his perspective and outlook. This morning, ARLP reported a continued rebound in our performance for the 2020 quarter as we posted increases to all major operating and financial metrics compared to the sequential quarter, reflecting increased sales from coal operations and higher oil and gas royalty revenues from our minerals segment. Total consolidated revenues rose 3.1% to $366.5 million. Higher revenues contributed to increased net income and EBITDA which climbed 28.8% to $35 million and 2.1% to $121.4 million, respectively, each compared to the sequential quarter.

The entire Alliance organization remained focused on optimizing cash flows by controlling working capital, expenses, and capital expenditures and these efforts continue to strengthen ARLP's balance sheet and financial position. During the 2020 quarter, ARLP generated free cash flow of $90.6 million, reduced debt and finance lease obligations by $67.8 million, and increased liquidity by $70.2 million. Our total leverage improved by 9.5% from the sequential quarter to 1.53 times and we ended the year comfortably in compliance with all of our debt covenants. Turning from our consolidated results, let's take a closer look at the performance of ARLP's business segments.

For our coal segment, sales and production volumes were both higher compared to the sequential quarter with total coal sales volumes rising 4.8% to 8.1 million tons and coal production increasing 3.4% to 7.4 million tons. Increased sales volumes more than offset lower price realizations driving coal sales revenues higher by 2.9% to $345.6 million. Ongoing expense control initiatives at all ARLP operations during the 2020 quarter led cost-per-ton lower compared to the sequential quarter as total segment-adjusted-EBITDA expense declined 2.3% to $27.38 per ton. Increased revenues and lower costs drove segment-adjusted EBITDA sequentially higher by 4.8% to $129.8 million.

ARLP's focus on reducing coal inventories and matching production to meet customer requirements reduced total coal inventory to approximately 600,000 tons at the end of the 2020 quarter, compared to 1.2 million tons at the end of the sequential quarter. The performance of our minerals segment also improved in the 2020 quarter. Compared to the sequential quarter, stronger commodity pricing pushed ARLP's average realizations per BOE higher by 29.6% and drove segment-adjusted EBITDA for our minerals segment up 15.1% to $10.2. While stronger commodity prices have encouraged a gradual resumption of drilling and completion of wells on our acreage, the effects of dramatically reduced operator activity in the second and third quarters of 2020 resulted in a 10.7% decrease in production volumes per BOE from our mineral interests compared to the sequential quarter.

It should not come as a surprise that the impacts of reduced global energy demand resulting from effects of the COVID-19 pandemic negatively impacted ARLP's results compared to the 2019 quarter and year. Reflecting lower coal and oil and gas volumes and prices in the 2020 quarter, total revenues 19.2% compared to the 2019 quarter and EBITDA declined by 3.8%. In a testament to the efforts of our teams to respond to the pandemic, net income for the 2020 quarter actually increased 35.6% compared to the 2019 quarter as the benefits of ARLP's expense-reduction initiatives more than offset lower revenues. Total revenues for the 2020 year fell 32.3% to $1.33 billion, leading adjusted net income and adjusted EBITDA lower to $27.8 million and $386.7 million, respectively, compared to $244.6 million and $599 million, respectively, for the 2019 year.

While we certainly experience challenges during 2020, ARLP was able to achieve several impressive accomplishments. As noted in our release this morning, during 2020, we significantly reduced working capital requirements, capital expenditures, operating expenses, and G&A, paid down approximately $197 million of total debt and financing leases, increased liquidity by nearly $220 million, and generated approximately $280 million of free cash flow. With that, I'll now turn the call over to Joe. Joe?

Joe Craft -- Chairman, President, and Chief Executive Officer

Thank you, Brian, and good morning, everyone. I'd like to open my comments this morning by reflecting on the extraordinary performance of our people in 2020. We entered 2020 anticipating significant growth in our minerals segment while at the same time, prepared to manage challenging coal markets due to low natural gas prices, tepid coal demand, and an overhang of coal supply. None of us, however, could have anticipated the COVID-19 pandemic and its devastating impact to energy demand.

As we have always done, the entire Alliance organization met these unprecedented challenges head-on rapidly responding to safeguard the health and safety of our people, protect our balance sheet, support our communities, and operate prudently as an essential supplier to our customers to help ensure the reliability of the electric grid so critical to the markets we serve. Despite the disruptions encountered during the year, our teams performed at the highest levels across the entire organization including our coal mines delivering the best safety record in the history of Alliance. The effectiveness of their response clearly demonstrated their flexibility, resilience, innovation, and determination to succeed. For their dedication, commitment, and all that they accomplished during such a tumultuous year, I extend my sincerest appreciation.

We entered 2021 hopeful that the economic activity and energy demand will continue to improve as vaccines become more available. In the U.S., increased power generation and higher natural gas prices point to the possibility of gas-to-coal switching and projections of increased coal demand in our primary markets. Conditions are improving in the international markets as well. Cold weather across Europe and Asia, sharply higher LNG prices, a weakening U.S.

dollar, and supply disruptions related to trade disputes are all supportive of potentially increased participation by U.S. producers in both the thermal and metallurgical export markets. Consequently, ARLP continues to target a 10% year-over-year increase in total coal sales volumes this year. During the 2020 quarter, ARLP contracted for 4.1 million tons of coal sales to be delivered in 2021, lifting our commitments to 78% of anticipated coal sales at the midpoint of our guidance for this year.

While pricing for the newly contracted tons were greater than published spot prices, they were mostly lower than the expiry -- expiring legacy contracts. As a result, we currently anticipate ARLP's 2021 average coal sales price per ton to decline approximately 4% to 8% from last year's average. Our mines did a great job reducing operating expenses and capital during 2020 and their efforts are expected to continue to benefit 2021 as well. For the full-year 2021, we currently anticipate segment-adjusted-EBITDA expense in a range of $27.50 to $30 per ton sold, a decrease of approximately 5% at the midpoint of our guidance compared to 2020.

Estimated capital expenditures of $120 million to $125 million for 2021 are comparable to last year. For our minerals segment, the significant reduction in drilling and completion activities by operators during 2020 that Brian mentioned earlier will continue to impact volumes produced from our minerals in 2021. Although drilling and completion has improved from the historic lows experienced last year, it takes time for increased activity to overcome the impact of such dramatic declines. As result, as we saw during the 2020 quarter, ARLP currently anticipates total BOE volumes from our acreage will decline from year-end 2020 levels during the first two quarters of 2021 before gradually increasing over the second half of the year.

Pricing for oil and natural gas and natural gas liquids have shown strength recently. And if the forward commodity price curves are sustained, we currently anticipate higher year-over-year price realizations in 2021 and a modest increase in the EBITDA contribution from our minerals segment this year. We believe ARLP's current outlook for 2021 supports a return to unitholder distributions this year. Assuming first-quarter results are in line with our expectations and our current outlook for the future does not change, I expect management will recommend the board to consider declaring a distribution to unitholders at its next quarterly meeting in April.

The board will determine whether to do so, as well as the amount of any future distribution based on numerous factors including business and market conditions, ARLP's future financial and operating performance outlook, and other capital-allocation priorities. Looking ahead, we see a bright future for Alliance despite recent headlines and rhetoric that may suggest otherwise. Low-cost, reliable energy is critical to the well-being and success of our country. We are proud of the role Alliance plays in supporting the desires of the communities we serve, to benefit from a thriving economy, a high standard of living, and a quality of life that allows them to flourish.

We firmly believe that the products ARLP delivers, coal, oil, and natural gas will remain essential to achieving these desired outcomes for years to come. We are also aware of the opportunities likely to be created by the ongoing transition toward new energy and power technologies. As we seek to create long-term unitholder value, ARLP is actively evaluating various strategies to utilize the cash flows from our existing assets to pursue opportunities in these developing areas which we believe have the potential to generate attractive long-term returns and sustainable cash flow growth. As these evaluations crystallize, we will execute on future opportunities in a disciplined and balanced manner, focused on optimizing cash flows from existing assets, pursuing strategic external opportunities, protecting our balance sheet, and returning cash to unitholders, maintaining access to capital markets, and generating attractive long-term total returns for all of our stakeholders.

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

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Lin Shen with HITE. Please go ahead.

Lin Shen -- HITE Edge Asset Management -- Analyst

Hi. Good morning. Thanks for taking the call.

Joe Craft -- Chairman, President, and Chief Executive Officer

Sure.

Lin Shen -- HITE Edge Asset Management -- Analyst

Two questions on -- Joe and Brian. The -- so, my first is maybe you can talk a little bit about, you know, with the new administration, we heard a lot of the discussion that there's going to be more project for wind and solar for utility -- for -- for the energy. So, what are your expectations for like your customers' closing profile of their alternative energy so that your demand can assist more not only from natural gas but also a lot of more from their alternative energy?

Joe Craft -- Chairman, President, and Chief Executive Officer

It's our view that, you know, in the energy space, we're talking about, really, some long-term planning that needs to be made. Obviously, policy decisions made by government can influence those decisions and those plans. But when we assess the demand for coal and the of the-the length of the power plants are going to be -- that are going to be operating over the next two decades, we find it hard to believe that these policies are going to change much. I find there's very many contradictions in the policies that are being advanced right now because on the one hand, they want to put a stop to building pipelines, they want to put a stop to building natural gas plants.

And I don't know how the administration can close other baseload-generating units without -- with -- without replacing those with baseload units. We all know that technology for wind and solar is not available today to operate as a baseload operator. The transmission systems are not designed to operate with intermittent power supply. So, the vision that they articulate, and fortunately, it seems like it's more sound bites than it is a vision, is not, you know, it's a very complex situation at hand and it's not going to happen overnight as -- as much as they are aspirational in their goals.

So, I can't find anyone that's been in the energy space that would suggest that the articulation of a 2035 target for fossil-neutral power generation is realistic. So, as we think about our business, you know, will it -- would we prefer to have a more pro-energy policy? Yes, but the practicality of the situation is such that demand for our product is still going to continue to be needed for the next two decades. And when you look at the size when we're, you know, right at a 30-million-ton producer in a 500-million-ton marketplace. So, there's plenty of opportunity for us.

We're a low-cost producer. You know, we feel that -- that there will be demand on the oil and gas side, it's the same. I think one thing that is amazing to me is that they only focus on emissions. They don't focus on all the products that oil and gas or they contribute to.

So, when you look at the daily products that we use every day with cellphones or whatever, it all requires mining, it all requires oil and gas in large -- in large quantities. And it's not a simple solution just to try to think in terms of eliminating permits and trying to do -- to have our economy move away from fossil fuels. Today, 2019 wind and solar are made up less than 3% of energy usage in the United States when you combine both transportation fuels and all -- all uses of the energy. So, to think that we're going to move away from fossil fuels that was over 80% of that pie chart is just an unrealist -- unrealistic expectation.

You know, as I mentioned in my prepared remarks, we do think that there will be alternative business opportunities because of these policy decisions. There will be a lot of subsidies and a lot of money directed to different alternatives to try to speed up the transition. So, we'll be looking at those to participate in a way that we feel we can get that same type of returns that historically we've been able to do. So, we're in the energy business.

We still believe strongly in coal and oil and gas and the demand and what it's going to provide for the next decade or two. At the same time, we will look at other alternatives in the event that technologies develops more rapidly and at lower cost than may be anticipated in the current environment.

Lin Shen -- HITE Edge Asset Management -- Analyst

Great.

Joe Craft -- Chairman, President, and Chief Executive Officer

You know, we could -- we could spend all day talking about this subject. So --

Lin Shen -- HITE Edge Asset Management -- Analyst

Yeah. Yeah. Yes. Yes.

Yes.

Joe Craft -- Chairman, President, and Chief Executive Officer

Sorry. The --

Lin Shen -- HITE Edge Asset Management -- Analyst

No. No, no, no. That's -- that's good. I mean, second question is you just mentioned that in April, you might resume the distribution.

I guess, I'm trying to ask like in your opinion, paying dividend is still a better way to return capital with the share buyback, or what is your reason?

Joe Craft -- Chairman, President, and Chief Executive Officer

We're going to look at all ways to -- and to utilize capital allocation. But we do believe that returning distributions is a major reason why a lot of our unitholders are in the units. And so, we feel that -- that that's an expectation and that is a -- a definable return of capital where unit -- shareholders can participate or anticipate exactly, you know, how they look at their total return when they try to evaluate investing in our company. So, we believe that that's a one critical element in shareholder return.

Share buybacks is another. We still have some authorization, so that's a possibility, you know, paying down debt, buying back bonds is a possibility, investing in growth assets. There are -- everything's on the table as far as trying to grow our shareholder value.

Lin Shen -- HITE Edge Asset Management -- Analyst

Great. Thank you very much. Appreciate it.

Operator

The next question comes from Lucas Pipes with B. Riley Securities. Please go ahead.

Lucas Pipes -- B. Riley Securities -- Analyst

Hey. Good morning, Joe. Good morning, Brian.

Joe Craft -- Chairman, President, and Chief Executive Officer

Good morning.

Brian Cantrell -- Senior Vice President and Chief Financial Officer

Good morning.

Lucas Pipes -- B. Riley Securities -- Analyst

I -- I wanted to focus a little bit on the export opportunities here at this juncture. To -- to what extent would you say this market is open or opening up? And to the extent it comes to your outlook with 2021, what -- what would you say are the pockets of potential upside from -- from a strengthening export market? Thank you very much.

Joe Craft -- Chairman, President, and Chief Executive Officer

We entered the year really not anticipating much volume in our export markets. So, like I mentioned in October, we had essentially all of our growth in sales was anticipated to come from the domestic market. And notwithstanding, I think the export markets have been influenced by a couple of things. The biggest thing being the China-Australia dispute and how that's disrupted flows of -- of coal in particular both in the metallurgical arena as well as the thermal market.

So, currently, that dispute has created opportunities for U.S. producers and we took advantage of that, booking some tons that are more in the metallurgical space, not necessarily met coal because we have a PCI coal at our MC operation in East Kentucky. So, we booked around 400,000, a little less than man -- a little more than that from that region and we were able to book them a little less than 1 million tons out of our Illinois Basin region for thermal opportunities where we saw the physical market be a little bit higher than the API 2 market. And we've been able to take advantage of -- of that to book that volume.

Even though we've seen some volatility in the API 2 market over the last two to three weeks, the physical market continues to be making inbound calls. So, we're continuing to feel positive about that market. But it's hard to answer your question of whether that it's sustainable or not or whether all of this demand is really a result of the Australia-and-China dispute and how the coal flows have been disrupted as a result of that. So, we're taking an opportunistic approach at -- at this moment in time.

And if we can be able to transact at prices that we feel are attractive then we will do so as far as thinking. In terms of projecting that this is going to encourage us to bring on more supply and -- and believe that it's sustainable, we're not there yet. So, we will continue to evaluate that market and see what happens. And, you know, because nobody knows, at least I don't know whether the -- Australia-and-China dispute will get resolved tomorrow or five years from now.

I just don't know. So, we're taking a cautious look but we're being opportunistic in where there's opportunity to capitalize on that. If it's, you know, attractive prices, we'll do so.

Lucas Pipes -- B. Riley Securities -- Analyst

Very helpful. Thank you. And -- and -- and just a -- as a quick follow-up on this, the export -- thermal export met coal tons that -- that you referenced just now. When were those booked? Were the -- was -- was that something that occurred over the last one month or three months? Just -- that could maybe help us get a sense for --

Joe Craft -- Chairman, President, and Chief Executive Officer

I would say some were as -- as late as last week and the earliest was probably middle of November forward.

Brian Cantrell -- Senior Vice President and Chief Financial Officer

That -- that's about right. Yeah.

Joe Craft -- Chairman, President, and Chief Executive Officer

Yeah. So, I think, you know, just -- just, you know, when you compare to what we had last year, I mean, last year we were about 950,000 tons, you know. That little over 500,000 in Appalachia and 400,000 in Illinois Basin. So, we've already exceeded that as -- and we're also a little bit more on the metallurgical side where we do feel that that has more sustainability.

And so, we are targeting to sell about 700,000 tons into that market more. So, we've already booked a little over 1 million -- 100,000 tons into that market. So, we're looking to sell another 700,000 this year, compared to last year, you know, it was around 450,000 or something.

Lucas Pipes -- B. Riley Securities -- Analyst

And that would be embedded in your 2021 outlook as well? That --

Joe Craft -- Chairman, President, and Chief Executive Officer

Yes, sir. The -- the sales targets for met is embedded in our guidance.

Lucas Pipes -- B. Riley Securities -- Analyst

Very helpful. Thank -- thank -- thank you very much for that. And then when -- when I look at 2021 capital expenditures, it -- it -- it looks like, you know, you're running at, you know, very efficient levels kind of when I think about, you know, the -- the -- the capital budget over the last few years. How -- how would you describe the 2021 spending levels? Is that, you know, an adjustment to a lower price environment that's more temporary, or would you say this is -- this is a level that would -- that -- that you could sustain for the coming -- for the coming years? Thank you.

Joe Craft -- Chairman, President, and Chief Executive Officer

So, we've benefited in both '20 and '21 by having excess equipment from mines that were closed. So, when we went from 40-million-ton producer to 27-million-ton producer obviously, we idled Gibson North and we idled a couple of units at other operations. So, we've got effectively some excess equipment that's benefiting that number I think over the ramping up. If we stay at this production level, I believe we could sustain this for another -- another year or so.

And then we'll see.

Lucas Pipes -- B. Riley Securities -- Analyst

Got it. Got it. Thank you. And then one last one for me.

Just -- just, Joe, back to Lin's question and your response if you might consider, you know, investments in -- it sounded like alternatives as well. Could -- could you narrow that down where -- where -- where you think you'd kind of be the most -- what -- what would be the most natural extension? And, you know, I -- I-- I hear you that you're suppler of -- of energy. I'm just curious that, I mean, it's -- it's a very broad space, obviously, that's still evolving. And what -- what -- what do you think you'd fit -- you'd fit in if -- if, you know, if you decide to further explore any opportunities there?

Joe Craft -- Chairman, President, and Chief Executive Officer

It's a little premature to discuss that publicly. I can tell you that we're in the process of establishing internal teams and we haven't decided whether we're going to be at five different areas of investigation or seven. We've already started investigating two or three, but we have identified different areas where we've got core competencies that we want to explore. And then we're looking at just the increased demand of you -- you name it, whether it's transmission to -- to batteries to battery storage to all kinds of different technologies in the space that if truly the EV market moves as fast as it does, there's -- there's plenty of opportunities to do things on the EV side.

So, we're trying to determine where best we fit, whether it's on the power side, whether it's on the EV side, whether it's in royalties and trying to expand royalties beyond just oil and gas and coal, to think in terms of using those skill sets we have. So, there's plenty of people out there investing and trying to find ways to give returns for the shareholder. I mean, just look at all the SPACs that have been created. So, we're not setting up the SPAC, but I guess you can start thinking well, we've -- we've got our own SPAC, and we've got this cash flow coming and what are we going to do with it then?

Lucas Pipes -- B. Riley Securities -- Analyst

Yeah. Yeah.

Joe Craft -- Chairman, President, and Chief Executive Officer

So, we're -- we're looking at a little bit of everything.

Lucas Pipes -- B. Riley Securities -- Analyst

Got it. Very helpful. Joe, Brian, I really appreciate the update, and best of luck.

Joe Craft -- Chairman, President, and Chief Executive Officer

Thanks, Lucas.

Operator

The next question comes from Shelly McNulty with Loomis Sayles. Please go ahead.

Shelly McNulty -- Loomis Sayles -- Analyst

Hi. Thanks for taking my question. First, going back to -- you were talking about baseload power. I just need a -- a better understanding like bigger picture kind of what percent of the total power is considered baseload, and how does that translate to how many tons of coal would be needed to sustain the baseload, given that you kind of talking about the solar and wind aren't capable of supporting, you know, the steady-state baseload power supply for first question.

Second question is on the expansion outside of coal natural gas and to other forms of energy. Just wondering how you plan on financing that. Is utilizing, you know, new forms of financing such as like transition bonds, is that something you're considering, or would it be done under the current financing you have in place like your revolver or whatnot? Thanks.

Joe Craft -- Chairman, President, and Chief Executive Officer

I'll take the last one first. I think financing will be a key component. So, -- of that decision. Their -- our focus right now is as we think in terms of having free cash flow going forward, how do we allocate that.

And right now, we would be looking in that arena, but then financing is a critical component. So, if they're going to -- if banks or other lenders are going to finance any of this, we're -- we're going to try to understand what financing is available and see if we can capture some of that and maybe use some of our cash flow just as equity if you want to think of it in that way that it might be outside of our bank groups, it might be in. We haven't advanced it that far to have those discussions. Back to your first question, you really got to look at it regionally.

But the simple part of what I was trying to say is when you think of the way the grid is designed, it is -- it is designed for baseload generation meaning that generation is feeding the power lines on a very consistent basis minute by minute with no interruption. And it allows the charge through the transmission to allow the -- the transmission of those electrons to be efficiently delivered. I've been advised that once you get to 30% or more of interruptible power that is going through those transmission lines, it complicates the efficiency of those transmission lines. And therefore, requires some reconsideration of how much capital that's needed to be spent to assure that the American public receives what they want which is when they walk in a room and turn on the switch that lights go on without interruption, without brownouts, without unreliable electricity.

So, we all know that today, if you try to charge the grid with the unreliable energy of -- of intermittent power, the -- the grid would not function the way we're used to it and expect. So, without -- again, this topic could -- could take two or three hours to get into the weeds, you know, region by region. But in theory over it in practice, what I -- what I was meaning is once you get to a certain scale with reliable, -- with it -- the -- with the non-reliable energy products, so the solar and wind, you've got to have transmission upgrades. And you're talking trillions of dollars depending on how widespread you want to make that and how fast you want to make it.

So, that -- all that has to be taken in consideration on the timing of how people shut down baseload generation.

Shelly McNulty -- Loomis Sayles -- Analyst

OK. Got it. And then though I appreciate, you know, the fact that you could talk about it ad nauseam and I actually think it's probably would be good for you to put these kinds of comments out there and educate people on things that aren't being talked about. Like you said, they're only like snippets of information and somehow get, you know, I think, more education -- the more nitty-gritty you guys can provide in supporting these statements on actual facts might, you know, give a little bit more support to the coal industry overall.

Joe Craft -- Chairman, President, and Chief Executive Officer

So, we do belong to an organization called America's Power that is trying the best to educate the American public on that subject. So, we just need to -- to someone like you that are interested to understand it. So, we're out there trying. But I -- I take to heart your comments, they're very well-founded and I agree 100% with what you're saying.

So --

Shelly McNulty -- Loomis Sayles -- Analyst

I don't know maybe you guys should start a reddit group or something that talks about it.

Joe Craft -- Chairman, President, and Chief Executive Officer

Maybe. That's a good idea.

Shelly McNulty -- Loomis Sayles -- Analyst

Yeah.

Joe Craft -- Chairman, President, and Chief Executive Officer

Wouldn't really have said it.

Shelly McNulty -- Loomis Sayles -- Analyst

Thank you so much.

Joe Craft -- Chairman, President, and Chief Executive Officer

I think it's a good idea.

Brian Cantrell -- Senior Vice President and Chief Financial Officer

Same as -- same as to move markets, I don't know. Thank you, Shelly.

Operator

[Operator instructions] Our next question comes from Joe [Inaudible] who is a private investor. Please go ahead.

Unknown speaker

Yeah. I know in my area, there's a large institution that was a big demand for power. So, in the winter when it gets really cold, there -- it's really cold there. They're -- they're gas and oil, natural gas, and they're -- and they're told you better switch to such and such because you don't have enough natural gas around -- around my day.

So, this is not a small scale. How is innovation that is so high that they start sort of closing down pipelines and stocks?

Joe Craft -- Chairman, President, and Chief Executive Officer

Well, I'm not exactly sure. Yeah. Obviously, with -- yeah. We know gas -- natural gas has been a transition fuel and needs to continue to be.

If the vision is that we can get to enough fossil-fuel environment then you still have to rely on fossil fuels and nuclear to bridge to that technology. And it just -- it's not going to happen overnight. And, you know, unfortunately, I believe the Biden administration knows that and I don't know why they just can't say the truth on that.

Unknown speaker

Well, that's my -- that's my point. The is issue is due with might be of I -- I -- I -- my city. How can you do it and do it as nationwide and call on closing all pipelines and everything? How could it -- if it -- if -- good luck.

Joe Craft -- Chairman, President, and Chief Executive Officer

Well, they say, I've been around this political game for a little while and they always -- the -- the -- the -- one of the comments that I always hear is it's really different to campaign and govern. So, it's humbling time you got to stop the campaigning and you get start governing. And I don't think that the Biden administration has moved from campaigning to governing. So, I think the point you're raising, it's a lot harder to have these aspirational soundbites that make campaign promises is a lot difficult.

You start implementing those in determining whether they're realistic. There was a article that I read last night that was published by CNBC with a guy of the name of I have Eric Rosenbaum that goes through the White House's plan -- climate change plan and the battle for America's most threatened workers. But it's interesting because it gets into the complexity of how you can transition overnight and all the unintended consequences by that if you don't think through the steps that it takes to get to where you want to go. And what I'm hearing you say is that we're starting, you know -- so, you're asking the question from a practical perspective how can you one day move from one fuel to the -- to the next when you see examples where it just -- it's physically is not going to work.

And I'd like to believe that when the Biden administration starts to truly think about executing on their strategy that they'll be grounded in the practicalities and -- and they're not going to allow the lights to just go or for homes not to get heating oil or fuel. That will impact people's lives. But time will tell.

Unknown speaker

Stay tuned.

Joe Craft -- Chairman, President, and Chief Executive Officer

Thank you, Joe.

Unknown speaker

Yup.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Brian Cantrell for any closing remarks.

Brian Cantrell -- Senior Vice President and Chief Financial Officer

Thanks, Tom. We appreciate everybody's time this morning, as well as your continued support of and interest in Alliance. Our next call to discuss our first-quarter 2021 financial and operating results is currently expected to occur in late April and we hope you'll join us again at that time. This concludes our call for today.

Thanks to everyone for your participation.

Operator

[Operator signoff]

Duration: 46 minutes

Call participants:

Brian Cantrell -- Senior Vice President and Chief Financial Officer

Joe Craft -- Chairman, President, and Chief Executive Officer

Lin Shen -- HITE Edge Asset Management -- Analyst

Lucas Pipes -- B. Riley Securities -- Analyst

Shelly McNulty -- Loomis Sayles -- Analyst

Unknown speaker

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