Alliance Resource Partners, L.P. (NASDAQ: ARLP) has reported a challenging fourth quarter for 2024, with total revenues declining by 5.6% year-over-year to $590.1 million. This performance, as analyzed by Stonegate Capital Partners, underscores the broader pressures facing the industry, including lower coal sales pricing and increased operating expenses. The company's net income significantly decreased to $16.3 million from $115.4 million in the same quarter of 2023, partly due to non-cash impairment charges of $31.1 million related to the MC Mining operation.
In the coal operations segment, sales revenue dropped by 3.3% year-over-year to $504.6 million, with coal sales volumes decreasing by 2.3% to 8.4 million tons. Despite these challenges, the Illinois Basin segment showed resilience with a 2.8% increase in sales volumes, while the Appalachia segment experienced a 17.1% decline due to reduced production at Tunnel Ridge. The company's adjusted EBITDA reached $124.0 million, marking a 27.2% sequential decline.
Despite the downturn, Alliance Resource Partners maintains a strong liquidity position of $593.9 million, including $137.0 million in cash and $456.9 million in available credit. The company generated free cash flow of $75.2 million for the quarter, bringing the year-to-date total to $383.5 million. The royalty business segment also faced headwinds, with total royalty revenues decreasing by 8.6% year-over-year to $48.5 million.
Looking ahead, Alliance Resource Partners remains committed to its fiscal year 2025 guidance, anticipating improvements driven by operational efficiencies, a strengthening order book, and declining domestic inventories. The company maintained its quarterly cash distribution at $0.70 per unit, demonstrating confidence in its financial stability despite current market conditions. Stonegate Capital Partners' analysis suggests a valuation range of $27.89 to $30.97 per unit, based on an EV/EBITDA framework using fiscal year 2025 expected EBITDA and a multiple range of 5.0x to 5.5x.
