Alliance Resource Partners, L.P. (ARLP) | Investment Case

1. Company Snapshot

1.a. Company Description

Alliance Resource Partners, L.P., a diversified natural resource company, produces and markets coal primarily to utilities and industrial users in the United States.The company operates through four segments: Illinois Basin Coal Operations, Appalachia Coal Operations, Oil & Gas Royalties, and Coal Royalties.It produces a range of thermal and metallurgical coal with sulfur and heat contents.

The company operates seven underground mining complexes in Illinois, Indiana, Kentucky, Maryland, Pennsylvania, and West Virginia.In addition, it leases land and operates a coal loading terminal on the Ohio River at Mt. Vernon, Indiana; and buys and resells coal, as well as owns mineral and royalty interests in approximately 1.5 million gross acres of oil and gas producing regions primarily in the Permian, Anadarko, and Williston Basins.Further, the company offers various mining technology products and services, including data network, communication and tracking systems, mining proximity detection systems, industrial collision avoidance systems, and data and analytics software.

As of December 31, 2021, it had approximately 547.1 million tons of proven and probable coal mineral reserves, as well as 1.17 billion tons of measured, indicated, and inferred coal mineral resources in Illinois, Indiana, Kentucky, Maryland, Pennsylvania, and West Virginia.The company was founded in 1971 and is headquartered in Tulsa, Oklahoma.

Show Full description

1.b. Last Insights on ARLP

Alliance Resource Partners, L.P.'s recent performance was negatively impacted by the company's decision to cut its dividend, reflecting a strategic pivot to address the long-term decline in coal demand and increasing regulatory pressures. The partnership's Q2 earnings report revealed a challenging environment, with management citing falling coal prices and shrinking profits as major headwinds. Stonegate Capital Partners recently updated its coverage on ARLP, likely assessing the partnership's prospects amidst the industry downturn. Additionally, ARLP was added to the Zacks Rank #5 (Strong Sell) List in June, indicating a negative outlook from analysts.

1.c. Company Highlights

Last Price	24.16
Change Percentage	-1.17%
Open	24.5
Previous Close	24.45
Market Cap ( Millions)	3103
Volume	37812
Year High	30.56
Year Low	22.2
M A 50	24.5
M A 200	25.37

FCF Yield	11.73%
Dividend Yield	10.76%
ROE	13.51%
Debt / Equity	26.02%
Net Debt / EBIDTA	61.77%
Price To Book	1.71
Price Earnings Ratio	12.68
Price To FCF	8.53
Price To sales	1.38
EV / EBITDA	5.7

2. ARLP's Q3 2025 Earnings: A Strong Performance Amidst Challenging Market Conditions

Alliance Resource Partners (ARLP) reported total revenues of $571.4 million in Q3 2025, a 6.9% decrease year-over-year, but a 4.4% increase sequentially. The average coal sales price per ton was $58.78, down 7.5% from Q3 2024, but up 1.5% sequentially. Net income attributable to ARLP was $95.1 million, with adjusted EBITDA of $185.8 million, up 9% year-over-year and 14.8% sequentially. The earnings per unit (EPU) came in at $0.74, beating estimates of $0.67. The company's liquidity stood at $541.8 million, with a total leverage ratio of 0.75x and a net leverage ratio of 0.6x.

Publication Date: Oct -27

                                    📋 Highlights
                                    Revenue & Pricing Mix::
                                                Q3 2025 total revenues fell 6.9% YoY to $571.4M but rose 4.4% sequentially, with average coal price dropping 7.5% YoY to $58.78/ton but climbing 1.5% sequentially.
EBITDA Growth::
                                                Adjusted EBITDA surged 9% YoY to $185.8M and 14.8% sequentially, driven by higher coal production and operational efficiencies.
Coal Production & Sales::
                                                Total coal production hit 8.4M tons (+8.5% YoY), while sales volumes rose 3.9% YoY to 8.7M tons, with Illinois Basin output at 3.6M tons.
Liquidity & Coverage::
                                                Liquidity reached $541.8M, net leverage at 0.6x, and distributable cash flow climbed 17% sequentially to $106.4M, supporting 1.37x distribution coverage.
2025-2026 Outlook::
                                                Contracted 32.8M tons for 2025, raised 2026 pricing guidance, and expects 29.1M tons sold with 300k-600k tons of met coal available, amid 15-16% YoY electricity demand growth.

                                

Operational Highlights

The company's operational performance was robust, with total coal production increasing 8.5% year-over-year to 8.4 million tons, and total coal sales volumes rising 3.9% to 8.7 million tons. The royalty segment saw an 11.9% year-over-year increase in revenues, driven by higher coal royalties. CEO Joseph Craft noted that U.S. coal demand is experiencing strong fundamentals, driven by favorable federal energy policy and rapid electricity demand growth.

Guidance and Outlook

For 2025, ARLP updated its guidance, with a contracted position of 32.8 million tons committed and priced, and a sales guidance range of 32.5 million to 33.25 million tons. The company also raised the low end of its coal sales pricing guidance ranges for both the Illinois Basin and Appalachia. ARLP expects operating and financial results for Q4 2025 to be similar to Q3 2025. The company anticipates 2026 coal volumes to be about 2 million tons higher than 2025, driven by growth in the Illinois Basin and potential increases at Tunnel Ridge.

Valuation and Dividend Yield

With a P/E Ratio of 0.03 and an EV/EBITDA of -0.31, the market appears to have priced in a challenging outlook for the company. However, the Dividend Yield stands at 11.25%, indicating an attractive return for income investors. The company's focus on maintaining a strong balance sheet and delivering attractive after-tax returns to unitholders is evident in its quarterly distribution of $0.60 per unit, with a calculated distribution coverage ratio of 1.37x.

Growth Prospects

ARLP has secured additional contract commitments for 2026, with 29.1 million sales tons contracted and priced, up 9% from the previous quarter. The company expects to increase production at Tunnel Ridge in the Illinois Basin, which will not require significant additional staffing. The potential for increased demand for coal, driven by data centers and the $625 million in Department of Energy funding for coal-fired power plants, provides a positive outlook for the company's growth prospects.

3. NewsRoom

Rep. Virginia Foxx Buys Alliance Resource Partners, L.P. (NASDAQ:ARLP) Shares

Dec -03

Source: defenseworld.net

Rep. Virginia Foxx Purchases Shares of Hercules Capital, Inc. (NYSE:HTGC)

Dec -03

Source: defenseworld.net

68 Graham Value All-Star (GVAS) November Dividend Dogs Show 27 'Safer' And 17 Ideal Buys

Dec -02

Source: seekingalpha.com

Alliance Resource Partners, L.P. to Attend Investor Conference

Nov -13

Source: businesswire.com

Alliance Resource Partners: A Value AI Bet

Oct -28

Source: seekingalpha.com

Stonegate Capital Partners Updates Coverage on Alliance Resource Partners, L.P. (ARLP) 2025 Q3

Oct -28

Source: newsfilecorp.com

Alliance Resource Partners, L.P. Common Units (ARLP) Q3 2025 Earnings Call Transcript

Oct -27

Source: seekingalpha.com

2 Coal Stocks Worth Watching as the Industry Battles Challenges

Oct -13

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.41%)

6. Segments

Illinois Basin

Expected Growth: 4.83%

The Illinois Basin's 4.83% growth is driven by Alliance Resource Partners' strategic expansion into high-demand markets, increased production efficiency, and favorable coal prices. Additionally, the basin's proximity to major transportation hubs and low-cost operations contribute to its growth. Furthermore, Alliance's diversified customer base and long-term contracts provide a stable revenue stream, supporting the segment's growth momentum.

Appalachia

Expected Growth: 3.63%

Appalachia's 3.63% growth from Alliance Resource Partners, L.P. is driven by increasing natural gas demand, proximity to high-growth markets, and low-cost operations. The region's abundant reserves, improved drilling efficiencies, and strategic infrastructure investments also contribute to its growth.

Oil & Gas

Expected Growth: 4.65%

Alliance Resource Partners, L.P.'s 4.65% growth in Oil & Gas is driven by increasing demand for energy, strategic acquisitions, and operational efficiencies. The partnership's diversified portfolio of oil and gas properties, combined with its focus on cost reduction and margin expansion, has enabled it to capitalize on favorable market conditions and drive growth.

Coal

Expected Growth: 4.83%

Alliance Resource Partners' 4.83% growth in coal segment is driven by increasing demand from utilities, strong operational performance, and strategic acquisitions. Additionally, the partnership's diversified customer base, favorable coal pricing, and cost control measures have contributed to its growth momentum.

Other, Corporate and Elimination

Expected Growth: 4.83%

Alliance Resource Partners, L.P.'s 4.83% growth is driven by Other segment's increased coal sales and pricing, Corporate segment's reduced operating expenses, and Elimination segment's improved intersegment eliminations, resulting from increased coal production and higher realized prices.

7. Detailed Products

Thermal Coal

Alliance Resource Partners, L.P. is a leading producer of thermal coal, which is used to generate electricity.

Metallurgical Coal

The company also produces metallurgical coal, which is used in the production of steel.

Coal Reserves

Alliance Resource Partners, L.P. owns and operates coal reserves, which are used to ensure a stable supply of coal.

Mineral Reserves

The company also owns and operates mineral reserves, which are used to extract minerals such as limestone and sand.

Oil and Gas

Alliance Resource Partners, L.P. also explores and produces oil and gas, which are used as energy sources.

8. Alliance Resource Partners, L.P.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Alliance Resource Partners, L.P. is medium due to the availability of alternative energy sources such as wind and solar power.

Bargaining Power Of Customers

The bargaining power of customers for Alliance Resource Partners, L.P. is low due to the company's strong market position and limited customer concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Alliance Resource Partners, L.P. is medium due to the company's dependence on a few key suppliers for coal production.

Threat Of New Entrants

The threat of new entrants for Alliance Resource Partners, L.P. is low due to the high barriers to entry in the coal mining industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Alliance Resource Partners, L.P. is high due to the competitive nature of the coal mining industry, with many established players vying for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	15.53%
Debt Cost	9.72%
Equity Weight	84.47%
Equity Cost	9.72%
WACC	9.72%
Leverage	18.38%

11. Quality Control: Alliance Resource Partners, L.P. passed 6 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Alliance Resource Partners

A-Score: 7.4/10

Value: 8.6

Growth: 4.8

Quality: 7.1

Yield: 10.0

Momentum: 5.5

Volatility: 8.7

1-Year Total Return ->

Natural Resource Partners

A-Score: 6.8/10

Value: 4.2

Growth: 5.6

Quality: 7.7

Yield: 9.0

Momentum: 6.5

Volatility: 8.0

1-Year Total Return ->

Chord Energy

A-Score: 6.5/10

Value: 8.1

Growth: 8.1

Quality: 5.1

Yield: 10.0

Momentum: 1.5

Volatility: 6.0

1-Year Total Return ->

Arch Resources

A-Score: 5.1/10

Value: 4.3

Growth: 7.3

Quality: 4.6

Yield: 5.0

Momentum: 3.5

Volatility: 5.7

1-Year Total Return ->

Peabody Energy

A-Score: 4.3/10

Value: 6.4

Growth: 3.8

Quality: 5.0

Yield: 1.0

Momentum: 6.5

Volatility: 3.3

1-Year Total Return ->

CONSOL Energy

A-Score: 4.0/10

Value: 5.8

Growth: 6.3

Quality: 4.9

Yield: 1.0

Momentum: 1.5

Volatility: 4.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-3.22%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.72%

Alliance Resource Partners, L.P. - US01877R1086

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ARLP

1.c. Company Highlights

Higher Yield

Medium Volatility

Fairly Valued

Earnings Beats

Revenues Beats

Earnings Miss

Revenues Miss

Strong Momentum

Average Quality

Less Volatile

Stable Momentum

Cheaper

Better Quality

2. ARLP's Q3 2025 Earnings: A Strong Performance Amidst Challenging Market Conditions

Operational Highlights

Guidance and Outlook

Valuation and Dividend Yield

Growth Prospects

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.41%)

6. Segments

Illinois Basin

Expected Growth: 4.83%

Appalachia

Expected Growth: 3.63%

Oil & Gas

Expected Growth: 4.65%

Coal

Expected Growth: 4.83%

Other, Corporate and Elimination

Expected Growth: 4.83%

7. Detailed Products

Thermal Coal

Metallurgical Coal

Coal Reserves

Mineral Reserves

Oil and Gas

8. Alliance Resource Partners, L.P.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Alliance Resource Partners, L.P. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

24.16$

Current Price

24.16$

Potential

-0.00%

12.e Scoring ^Insights

12.f DCF ^BETA