Alliance Resource Partners Reports Strong Third Quarter 2025 Performance with Improved Operational Efficiency

Stonegate Capital Partners updated coverage on Alliance Resource Partners, L.P. following the company's third quarter 2025 performance. ARLP delivered solid results with higher coal volumes and improved unit costs offsetting 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. 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 14.8% sequential increase. ARLP tightened full-year 2025 guidance, projecting fourth quarter results comparable to the third quarter, supported by improving operational execution. The company reported revenue, adjusted EBITDA, and adjusted EPS of $547.5 million, $161.9 million, and $0.46, respectively. Average realized coal price modestly increased sequentially but was down year-over-year, primarily as higher-priced legacy contracts signed during the 2022 energy crunch rolled off in 2024.

Coal operations showed mixed performance across regions. 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. In the Illinois Basin, sales volumes rose 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. In 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.

The royalty business contributed significantly to overall performance. Total royalty revenues for the quarter totaled $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 by 38.1% to 7.06 million tons, with average revenue per royalty ton increasing by 7.4% to $3.50.

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. The Partnership returns a quarterly cash distribution of $0.60 per unit, or $2.40 per unit on an annualized basis. ARLP also held 568 BTC valued at $64.8 million at quarter-end. Overall, cost initiatives and a growing order book position the Partnership well for the remainder of fiscal year 2025.