Stonegate Capital Partners Highlights Alliance Resource Partners' Resilient Performance Amid Market Challenges
TL;DR
Alliance Resource Partners, L.P. (ARLP) demonstrates resilience in 2Q25 with higher coal sales volumes and strong liquidity, offering investors a potential advantage in a challenging market.
ARLP's 2Q25 performance shows a 7.7% revenue decrease to $547.5M, with coal sales volumes up 6.8% but prices down 11.3%, alongside a $16.6M increase in digital assets' fair value.
ARLP's commitment to cost efficiencies and strong contracted commitments supports stable employment and contributes to energy sector stability, making tomorrow better for stakeholders and communities.
ARLP's 2Q25 reveals a fascinating mix of challenges and opportunities, from a $25.0M non-cash impairment to a 1.2% sequential increase in Adj. EBITDA, showcasing the dynamic nature of the energy sector.
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Alliance Resource Partners, L.P. (NASDAQ: ARLP) has shown a resilient performance in the second quarter of 2025, as highlighted by Stonegate Capital Partners in their updated coverage. Despite facing a 7.7% year-over-year decrease in total revenues to $547.5M, primarily due to an 11.3% decline in average coal sales prices and lower transportation revenues, the company managed to increase its coal sales volumes by 6.8% year-over-year to 8.38 million tons. This achievement underscores ARLP's ability to navigate through market uncertainties and maintain operational efficiency.
The net income for the quarter saw a significant drop to $59.4M from $100.2M in 2Q24, attributed to lower revenues, increased depreciation, and a $25.0M non-cash impairment on a battery materials equity investment. However, this was partially offset by a $16.6M increase in the fair value of digital assets, showcasing the company's diversified investment strategy. Adjusted EBITDA slightly increased by 1.2% sequentially to $161.9M, reflecting ARLP's cost management and operational adjustments in response to market dynamics.
ARLP's coal operations reported sales revenue of $485.5M, with the Illinois Basin seeing a 15.2% increase in sales volumes to 6.67 million tons, driven by record shipping at Hamilton and River View. Conversely, Appalachia volumes fell by 16.8% to 1.72 million tons due to operational challenges at Tunnel Ridge. The company's royalty business contributed $53.1M in revenues, with oil and gas royalties totaling $35.5M, despite a 9.6% decline in the average sales price per BOE.
Financially, ARLP remains robust with $499.2M in total liquidity and a free cash flow of $79.0M for the quarter. The company continues to return value to its unitholders with a quarterly cash distribution of $0.60 per unit. Stonegate Capital Partners' valuation of ARLP, using an EV/EBITDA framework, suggests a valuation range of $29.51 to $32.25, with a midpoint of $30.88, indicating confidence in the company's future performance.
For more detailed information on Alliance Resource Partners, L.P.'s performance and Stonegate Capital Partners' analysis, visit https://www.stonegateinc.com. This coverage update provides investors and industry observers with critical insights into ARLP's operational resilience and financial health amidst challenging market conditions.
Curated from Reportable
