Alliance Resource Partners, L.P. Q2 FY2025 earnings call

• Second quarter 2025 results: Revenues down y-o-y but up sequentially due to increased coal sales volumes.
• Coal production and sales: Illinois Basin volumes up, Appalachia volumes down but Tunnel Ridge longwall move completed.
• Costs: Segment adjusted EBITDA expense per ton sold decreased.
• 2025 guidance update: Illinois Basin volume guidance increased, Appalachia volume reduced; 2026 committed tons up.
• Oil & Gas Royalties: Volumes exceeded expectations, guiding for higher commodity streams.
• Regulatory environment: Supportive actions by the administration benefit coal market.
• $25M investment: Involved in a private equity fund for the Gavin coal power plant acquisition, expected to be accretive.

Coal Operations: Total revenues for the 2025 quarter were $547.5 million, down from $593.4 million in 2024Q. Coal sales volumes were 8.4 million tons, up 6.8% y-o-y. Average coal sales price per ton was $57.92, down 11.3% y-o-y. Segment adjusted EBITDA expense per ton sold was $41.27, down 9% y-o-y. Illinois Basin coal sales volumes increased 15.2% y-o-y, while Appalachia volumes were down 16.8% y-o-y due to Tunnel Ridge mining challenges. Royalty Segment: Total revenues were $53.1 million, up 0.2% y-o-y. Oil and gas royalty volumes increased 7.7% BOE, but pricing was down 9.6% y-o-y. Coal royalty tons sold increased, with revenue per ton down 3.6% y-o-y but up 3.2% sequentially.

• 2025: Illinois Basin volume guidance increased to 25-25.75 million tons; Appalachia volume guidance reduced to 7.75-8.25 million tons. Sales pricing guidance for Appalachia increased to $79-$83 per ton. Full year 2025 average coal sales price unchanged at $57-$61 per ton.
• 2026: Anticipated average coal sales price ~5% below 2025 midpoint. Cost guidance for 2025 segment adjusted EBITDA expense per ton $39-$43. Oil & Gas Royalties volume guidance increased for all commodity streams.

• Market conditions and pricing volatility.
• Mining challenges in Appalachia affecting volumes.
• Trade policy uncertainty impacting costs, sales opportunities, and pricing.
• Oil price volatility affecting Oil & Gas Royalties business.

Q: Nathan Martin asked about the $25 million investment in the Gavin coal power plant and potential future investments.

A: Joseph Craft said it's part of a private equity fund, expected to be accretive, and there are other potential opportunities with utilities looking to sell plants.

Q: Mark Reichman inquired about the distribution cut and growth in sales tonnage for 2026.

A: Joseph Craft said the distribution cut was due to rebalancing to sustainable margins, and growth in 2026 could come from Tunnel Ridge's improved operations and potential export market recovery.

Q: Dave Storms asked about macro trade deal impact and inventory pacing.

A: Joseph Craft mentioned manufacturing and AI demand increases, and inventories are stabilizing at equilibrium levels.

Q: Michael asked about Chinese demand impact on U.S. pricing and royalty portfolio investments.

A: Joseph Craft said domestic pricing is better, and the royalty portfolio continues to invest in Permian and Delaware Basins, with plans to grow the program.