Alliance Resource Partners Reports Mixed Q3 Results with Strong Operational Improvements Amid Pricing Challenges
Alliance Resource Partners delivered solid third-quarter performance with increased coal volumes and improved costs offsetting lower pricing, while maintaining strong liquidity and positioning for stable fourth-quarter results.
Alliance Resource Partners, L.P. reported mixed third-quarter 2025 results, demonstrating operational resilience despite challenging pricing conditions in the coal market. The partnership delivered higher coal volumes and improved unit costs that partially offset lower year-over-year realized pricing, resulting in a net income increase to $95.1 million compared to $86.9 million in the same quarter last year.
Total revenues for the quarter decreased 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. Adjusted EBITDA showed sequential improvement, coming in at $185.8 million, representing a 14.8% increase from the previous quarter. The partnership tightened its full-year 2025 guidance, projecting fourth-quarter results comparable to the third quarter, supported by improving operational execution.
Coal operations generated $511.6 million in revenue with sales volumes totaling 8.70 million tons, up 3.9% year-over-year, while pricing decreased 7.5% to $58.78 per ton. Regional performance varied significantly, with Illinois Basin operations showing strong volume growth of 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. However, Illinois Basin pricing declined 9.9% to $51.03 per ton. Appalachian volumes fell 13.3% year-over-year to 2.09 million tons as Tunnel Ridge transitioned to a new longwall district with better geology, while pricing in the region rose 3.1% to $83.28 per ton on a stronger sales mix.
The royalty business showed mixed results, with total royalty revenues for the quarter totaling $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 significantly by 38.1% to 7.06 million tons, with average revenue per royalty ton increasing by 7.4% to $3.50.
Alliance Resource Partners maintained a strong liquidity position, ending the quarter with $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, supporting the partnership's quarterly cash distribution of $0.60 per unit, or $2.40 per unit on an annualized basis. The partnership also held 568 Bitcoin valued at $64.8 million at quarter-end, reflecting its diversified asset strategy. According to Stonegate Capital Partners valuation analysis using an EV/EBITDA framework with a 6.25x multiple, the partnership's fair value estimate ranges from $30.52 to $33.31 per unit.