Alliance Resource Partners, L.P. Q4 FY2025 earnings call

Fourth Quarter 2025 Results

• Adjusted EBITDA was $191.1 million, up 54.1% from 2024 quarter and 2.8% sequentially. Net income attributable to ARLP was $82.7 million. Total revenues were $535.5 million, down year over year due to lower coal sales and transportation, offset by record oil and gas royalty volume.

Coal Operations Highlights

• Coal production was 8.2 million tons in 2025 quarter, wholesale volumes were 8.1 million tons. Segment adjusted EBITDA expense per ton sold for coal operations was $40.24 per ton. Illinois Basin and Appalachia performance details provided. Metiqui mine faced customer outages, expected to close in March 2026, impacting sales volumes.

Royalty Segments Highlights

• Royalty segments delivered strong results. Oil and gas royalty BOE volumes increased, coal royalty tons sold expected to increase.

Balance Sheet and Cash Flows

• Total net leverage ratios were 0.66 and 0.56x debt to trailing twelve months adjusted EBITDA. Liquidity was $518.5 million. Free cash flow was $93.8 million in 2025 quarter.

Coal Operations

• 2025 Quarter: Adjusted EBITDA was $191.1 million. Total revenues were $535.5 million. Coal production was 8.2 million tons. Segment adjusted EBITDA expense per ton sold for coal operations was $40.24 per ton.
  • Illinois Basin: Coal sales volumes were 6.5 million tons in 2025 quarter, segment adjusted EBITDA expense per ton decreased 14.4% vs 2024 quarter.
  • Appalachia: Coal sales volumes were 1.7 million tons in 2025 quarter, segment adjusted EBITDA expense per ton decreased 17.5% vs 2024 quarter but increased 9.7% sequentially.

Royalty Segments

• Coal Royalty: Total revenue in 2025 quarter was $56.8 million, up 17.2% year over year. Coal royalty tons sold expected to be 6 million tons higher or 25% above 2025 level in 2026.
• Oil and Gas Royalty: Total revenue in 2025 quarter was $56.8 million, up 17.2% year over year. BOE volumes increased 20.2% year over year and 10% sequentially in 2025 quarter, segment adjusted EBITDA was $30 million. 2026 volumes expected to be 1.5 - 1.6 million barrels of oil, 6.3 - 6.7 million CF of natural gas, 825 - 875,000 barrels of natural gas liquid.

2026 Guidance

• Coal Sales Volumes: Anticipated to be in the range of 33.75 to 35.25 million tons.
• Pricing: Illinois Basin sales pricing expected $50 - $52 per ton, Appalachia $66 - $71 per ton. Segment EBITDA expense per ton: Illinois Basin $33 - $35, Appalachia $49 - $53.
• Oil and Gas Royalty: Volumes expected 1.5 - 1.6 million barrels of oil, 6.3 - 6.7 million CF of natural gas, 825 - 875,000 barrels of natural gas liquid. Segment adjusted EBITDA expense expected to be approximately 14% of oil and gas royalty revenues.
• Coal Royalty: Tons sold expected 6 million tons higher or 25% above 2025 level.
• Capital Expenditures: Expected to be $280 - $300 million.

Risks

• Metiqui Mine Challenges: Customer outages leading to expected closure in March 2026, impact on sales volumes and potential impairment.
• Market Volatility: Natural gas price fluctuations, weather events (like Arctic blast) affecting demand and pricing.
• Regulatory and Policy Uncertainties: Impact on coal unit retirements and grid reliability policies.

Q: Nathan Martin asks about remaining unsold tons and potential price impact.

A: Joseph Craft states most unsold tons in Illinois Basin, with upside potential based on customer optionality.

Q: Matthew Key asks about sales cadence in 2026 and export sales.

A: Cary Marshall says first quarter low, second quarter improving, back half best; Joseph Craft mentions export sales mainly MC Mining, focused on domestic.

Q: Mark Bickman asks about sales tons delta between segments.

A: Cary Marshall and Joseph Craft explain increase in coal royalty tons due to Tunnel Ridge new district and Hamilton operation.

Q: Michael Matheson asks about longer-term pricing and inventory.

A: Joseph Craft states limited supply, increasing demand, supporting higher pricing.