Stonegate Capital Partners Highlights Alliance Resource Partners' Resilient Performance Amid Market Challenges
Alliance Resource Partners, L.P. demonstrates resilience in 2Q25 despite lower coal pricing and macroeconomic uncertainties, with updated FY25 guidance reflecting optimism for improved production and cost efficiencies.
Alliance Resource Partners, L.P. (NASDAQ: ARLP) has shown a resilient performance in the second quarter of 2025, as detailed in the latest coverage update by Stonegate Capital Partners. Despite facing a 7.7% year-over-year decrease in total revenues to $547.5M, primarily due to an 11.3% decline in average coal sales prices and lower transportation revenues, the company managed to report a net income of $59.4M. This performance was supported by higher coal sales volumes and a stable contribution from oil & gas royalty revenues, showcasing the company's ability to navigate through challenging market conditions.
The adjusted EBITDA for the quarter stood at $161.9M, marking a 1.2% sequential increase. This resilience is attributed to expectations of improved production at Tunnel Ridge, higher tons sold from the Illinois Basin, and strong contracted commitments. The company's coal operations reported sales volumes of 8.38 million tons, up 6.8% year-over-year, despite a decrease in pricing by 11.3% to $57.92 per ton. The Illinois Basin saw a significant increase in sales volumes by 15.2% year-over-year to 6.67 million tons, driven by record monthly shipping at Hamilton and River View in June.
On the royalty front, total revenues for the quarter were $53.1M, with oil & gas royalties contributing $35.5M. The company also reported a solid liquidity position, ending the quarter with $499.2M in total liquidity, including $55.0M in cash and $444.2M available under its credit facilities. Free cash flow for the quarter was $79.0M, allowing the company to maintain a quarterly cash distribution of $0.60 per unit.
Stonegate Capital Partners' valuation of ARLP, using an EV/EBITDA framework, suggests a valuation range of $29.51 to $32.25 with a midpoint of $30.88. This analysis underscores the company's potential for growth and stability in the face of macroeconomic uncertainties. For more detailed insights into ARLP's performance and future outlook, visit https://www.stonegateinc.com.