Stonegate Capital Partners Updates Coverage on Alliance Resource Partners, L.P. Amidst Market Challenges

Alliance Resource Partners, L.P. (NASDAQ: ARLP) has shown a notable resilience in its second quarter of 2025, as detailed in the latest coverage update by Stonegate Capital Partners. 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 reduced transportation revenues, ARLP managed to offset some of these challenges through higher coal sales volumes and a stable contribution from oil & gas royalty revenues. The company's net income for the quarter was reported at $59.4M, down from $100.2M in 2Q24, influenced by lower revenues, increased depreciation, and a $25.0M non-cash impairment on a battery materials equity investment. However, a $16.6M increase in the fair value of digital assets provided some relief.

ARLP's adjusted EBITDA for the quarter stood at $161.9M, marking a slight sequential increase of 1.2%. This performance comes amidst macroeconomic uncertainties, yet the company has updated its FY25 guidance, buoyed by expectations of improved production at Tunnel Ridge, higher sales volumes from the Illinois Basin, cost efficiencies, and strong contracted commitments. The coal operations segment reported sales volumes of 8.38 million tons, up 6.8% year-over-year, although pricing saw an 11.3% decrease to $57.92 per ton. The Illinois Basin notably contributed to this volume increase, with sales up 15.2% year-over-year to 6.67 million tons, despite a 10.1% decline in pricing to $51.59 per ton.

The royalty business segment also presented mixed results, with total royalty revenues at $53.1M. Oil and gas royalties accounted for $35.5M of this total, with volumes sold increasing by 7.7% year-over-year to 0.88 million BOE, albeit at a 9.6% lower average sales price of $40.30 per BOE. Coal royalty tons sold saw a 10.4% increase to 5.5 million tons, with average revenue per royalty ton declining by 3.6% to $3.21.

Financially, ARLP remains in a strong position, ending 2Q25 with $499.2M in total liquidity, including $55.0M in cash and $444.2M available under its credit facilities. The company generated $79.0M in free cash flow for the quarter and continues to return value to its unitholders through a quarterly cash distribution of $0.60 per unit. With cost initiatives and a growing order book, ARLP is strategically positioned to navigate the remainder of FY25 effectively.

For more detailed insights into ARLP's performance and Stonegate Capital Partners' analysis, visit https://www.stonegateinc.com.