Alliance Resource Partners Reports Resilient Q2 2025 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 demonstrated a resilient performance in the second quarter of 2025, with coal sales volumes rising despite facing lower coal pricing and stable contributions from oil & gas royalty revenues. The company reported a 7.7% year-over-year decrease in total revenues to $547.5 million, attributed mainly to an 11.3% decline in average coal sales prices and reduced transportation revenues. Net income for the quarter also saw a decrease to $59.4 million from $100.2 million in the same period last year, influenced by lower revenues, increased depreciation, and a significant non-cash impairment on a battery materials equity investment, though partially mitigated by a $16.6 million increase in the fair value of digital assets.
Adjusted EBITDA for the quarter slightly increased by 1.2% sequentially to $161.9 million, showcasing the company's ability to navigate through macroeconomic uncertainties. ARLP has proactively updated its FY25 guidance, buoyed by expectations of enhanced production at Tunnel Ridge, increased sales from the Illinois Basin, operational cost efficiencies, and robust contracted commitments. The coal operations segment reported sales revenue of $485.5 million, with coal sales volumes growing by 6.8% year-over-year to 8.38 million tons, despite an 11.3% decrease in pricing to $57.92 per ton.
The royalty business segment remained a steady contributor, generating $53.1 million in total revenues, with oil & gas royalties accounting for $35.5 million. Financially, ARLP concluded the quarter with strong liquidity, boasting $499.2 million in total liquidity, which includes $55.0 million in cash and $444.2 million available under its credit facilities. The company also reported a free cash flow of $79.0 million for the quarter, alongside declaring a quarterly cash distribution of $0.60 per unit.
Stonegate Capital Partners has reevaluated ARLP's valuation, employing an EV/EBITDA framework ranging from 6.0x to 6.5x, resulting in a valuation range of $29.51 to $32.25, with a midpoint at $30.88. This analysis highlights ARLP's potential for sustained resilience and growth amidst prevailing market challenges. For further insights into ARLP's performance and valuation, visit https://www.stonegateinc.com.
Curated from Reportable
