Alliance Resource Partners, L.P. (NASDAQ: ARLP) demonstrated a resilient performance in the second quarter of 2025, with coal sales volumes increasing by 6.8% year-over-year to 8.38 million tons. However, this achievement was partially offset by an 11.3% decline in average coal sales prices and a decrease in transportation revenues, leading to a 7.7% year-over-year drop in total revenues to $547.5 million. The company's net income also saw a significant reduction to $59.4 million from $100.2 million in the same quarter the previous year, attributed to lower revenues, increased depreciation, and a $25.0 million non-cash impairment on a battery materials equity investment.
Despite these challenges, ARLP's Adjusted EBITDA for the quarter showed a slight sequential increase of 1.2% to $161.9 million. The company has updated its FY25 guidance, buoyed by expectations of improved production at Tunnel Ridge, higher sales volumes from the Illinois Basin, operational cost efficiencies, and strong contracted commitments. The coal operations segment reported sales revenue of $485.5 million, while the royalty business segment contributed $53.1 million in total revenues, with oil & gas royalties accounting for $35.5 million.
ARLP concluded the quarter with robust liquidity, holding $499.2 million in total liquidity, which includes $55.0 million in cash and $444.2 million available under its credit facilities. The company generated $79.0 million in free cash flow and announced a quarterly cash distribution of $0.60 per unit. Stonegate Capital Partners has provided an updated valuation for ARLP, using an EV/EBITDA framework, suggesting a valuation range of $29.51 to $32.25 with a midpoint of $30.88. This analysis, available at https://www.stonegateinc.com, highlights the company's potential for resilience and growth amidst current market uncertainties.
