Alliance Resource Partners Reports Strong Q3 Performance with Improved Operational Efficiency

Alliance Resource Partners, L.P. delivered a solid third quarter performance in 2025, with higher coal volumes and improved unit costs helping to offset lower year-over-year realized pricing. Total revenues for the quarter decreased by 6.9% year-over-year to $571.4 million, as an 8.5% increase in coal production and 3.9% increase in coal sales volumes were more than offset by lower coal price realizations and reduced transportation revenues. Despite the revenue decline, net income for the quarter rose to $95.1 million compared to $86.9 million in the third quarter of 2024, primarily aided by lower operating costs and higher investment income.

Adjusted EBITDA came in at $185.8 million, representing a significant 14.8% sequential increase from the previous quarter. The Partnership tightened its full-year 2025 guidance, projecting fourth quarter results comparable to the third quarter, supported by improving operational execution. ARLP reported revenue, adjusted EBITDA, and adjusted EPS of $547.5 million, $161.9 million, and $0.46 respectively, with average realized coal price modestly increasing sequentially but declining year-over-year as higher-priced legacy contracts signed during the 2022 energy crunch rolled off in 2024.

In coal operations, ARLP reported coal sales revenue of $511.6 million with coal sales volumes totaling 8.70 million tons, up 3.9% year-over-year, while pricing decreased by 7.5% to $58.78 per ton. The Illinois Basin operations showed particular strength with sales volumes rising 10.8% year-over-year to 6.61 million tons, driven by increased production, fewer longwall-move days at Hamilton, and improved recoveries at River View and Hamilton. Appalachia volumes fell 13.3% year-over-year to 2.09 million tons as Tunnel Ridge transitioned to a new longwall district with better geology. Regional pricing was mixed with a 9.9% decline in the Illinois Basin to $51.03, while Appalachia rose 3.1% to $83.28 on a stronger sales mix.

The royalty business segment showed strong performance with total royalty revenues for the quarter totaling $57.4 million. Oil and gas royalties totaled $32.1 million, with BOE volumes sold increasing 4.1% year-over-year to 0.899 million BOE, although the average sales price per BOE declined by 10.5% to $35.68. Coal royalty tons sold increased significantly by 38.1% to 7.06 million tons, with average revenue per royalty ton increasing by 7.4% to $3.50. Total Segment Adjusted EBITDA from coal operations came in at $157.5 million, up 5.5% year-over-year and approximately 11.0% sequentially, supported by lower unit costs.

ARLP ended the third quarter with solid liquidity, holding $541.8 million in total liquidity including $94.5 million in cash and $447.3 million available under its credit facilities. Free cash flow for the quarter was $151.4 million, demonstrating the Partnership's strong financial position. The Partnership continues to return value to unitholders with a quarterly cash distribution of $0.60 per unit, or $2.40 per unit on an annualized basis. ARLP also held 568 Bitcoin valued at $64.8 million at quarter-end, reflecting the company's diversified asset approach. Stonegate Capital Partners maintains coverage of Alliance Resource Partners and provides detailed analysis through their research platform at https://stonegateinc.com.

The improved operational performance and cost initiatives position the Partnership well for the remainder of fiscal year 2025. The transition at Tunnel Ridge to better geology in Appalachia is expected to yield further operational improvements, while the strong liquidity position provides financial flexibility. For investors, the combination of operational efficiency gains, strong cash flow generation, and consistent distributions creates a compelling investment case in the energy sector. The valuation framework using EV/EBITDA analysis suggests a range of $30.52 to $33.31 with a midpoint of $31.91, indicating potential upside from current trading levels.