Stonegate Capital Partners Updates Coverage on Alliance Resource Partners, L.P. (ARLP) 2025 Q1April 29, 2025 9:51 AM EDT | Source: Reportable, Inc.Dallas, Texas--(Newsfile Corp. - April 29, 2025) - Alliance Resource Partners, L.P. (NASDAQ: ARLP): Stonegate Capital Partners updates coverage on Alliance Resource Partners, L.P. ARLP reported a resilient 1Q25, with lower coal sales volumes and pricing partially offset by oil & gas royalty revenues. Total revenues for the quarter decreased by 17.1% ...

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were $540.5 million, down from $651.7 million in Q1 2024, primarily due to reduced coal sales volumes and prices as well as lower transportation revenues [5] - Average coal sales price per ton decreased by 6.9% year-over-year to $60.29, but increased by 0.5% sequentially [5] - Net income for Q1 2025 was $74 million, compared to $158.1 million in Q1 2024, reflecting lower coal sales volumes and realized prices [11] - Adjusted EBITDA for Q1 2025 was $159.9 million [11] - Total debt outstanding was $484.1 million, with total liquidity at $514.3 million [12] Business Line Data and Key Metrics Changes - Total coal production in Q1 2025 was 8.5 million tons, a decrease of 7.2% compared to Q1 2024, while coal sales volumes decreased by 10.4% to 7.8 million tons [5][6] - In the Illinois Basin, coal sales price per ton decreased by 4.2%, while in Appalachia, it decreased by 8.5% [5] - Segment adjusted EBITDA expense per ton sold for coal operations was $42.75, an increase of 4.7% year-over-year [7] Market Data and Key Metrics Changes - The domestic market strengthened in early 2025 due to cold weather, higher natural gas prices, and declining coal inventories, leading to increased coal consumption [19] - The company has secured commitments for an additional 17.7 million tons over the 2025 to 2028 period, with 32.5 million tons committed in price for 2025 [14] - Coal consumption in Q1 2025 was 20% higher than the previous year [69] Company Strategy and Development Direction - The company plans to prioritize domestic market contracts over new export contracts due to strong domestic demand [19] - The company is committed to maintaining a strong balance sheet and disciplined capital allocation while monitoring trade policy impacts [27] - The company expects to see cost improvements in Appalachia as mining conditions improve [18] Management's Comments on Operating Environment and Future Outlook - Management noted that the executive orders from the administration regarding coal and grid reliability are positive for the industry [21][22] - The company anticipates a material improvement in full-year costs to offset lower realized pricing in the coal business for 2025 [15] - Management expressed confidence in achieving cost guidance for Appalachia as operations improve [45] Other Important Information - The company declared a quarterly distribution of $0.70 per unit for Q1 2025, unchanged from previous quarters [12][27] - The company plans to invest in oil and gas minerals and data center infrastructure, depending on market conditions [50][56] Q&A Session Summary Question: Comments on President Trump's executive orders and coal plant retirement delays - Management indicated that most utilities served intend to take advantage of extensions for coal plants and are responsive to increased electricity demand [36][37] Question: Impact of trade policies on business - Management discussed the impact of tariff increases on steel and aluminum and the uncertainty surrounding trade policies, but noted the administration's awareness of the energy sector's importance [41][43] Question: Confidence in achieving cost per ton guidance for Appalachia - Management expressed confidence in achieving cost guidance, with improvements expected in the second half of 2025 as operations stabilize [45][46] Question: Capital allocation strategy in the current environment - Management stated that capital allocation is focused on maintenance capital for coal operations, while also evaluating growth opportunities in data center infrastructure [49][50]

Financial Performance - Total revenues for the 2025 Quarter decreased by 17.1% to $540.5 million compared to $651.7 million for the 2024 Quarter[3] - Net income for the 2025 Quarter was $74.0 million, or $0.57 per unit, down from $158.1 million, or $1.21 per unit, in the 2024 Quarter[3] - Adjusted EBITDA for the 2025 Quarter was $159.9 million, a decrease of 33.5% compared to $240.6 million in the 2024 Quarter[5] - Coal sales decreased to $468.5 million in Q1 2025, down 16.6% from $561.9 million in Q1 2024[33] - Net income attributable to ARLP for Q1 2025 was $73.98 million, a decline of 53.3% compared to $158.1 million in Q1 2024[33] - Earnings per limited partner unit decreased to $0.57 in Q1 2025 from $1.21 in Q1 2024[33] - Cash flows from operating activities were $145.7 million in Q1 2025, down 30.6% from $209.7 million in Q1 2024[35] - Distributable Cash Flow (DCF) for Q1 2025 was $84.1 million, compared to $140.1 million in Q1 2024, reflecting a decrease of 40%[41] - The Distribution Coverage Ratio (DCR) for Q1 2025 was 0.93, down from 1.53 in Q4 2024[41] - Free cash flow for Q1 2025 was $52.7 million, down 41.5% from $90.2 million in Q1 2024[48] Sales and Production - Coal sales volumes decreased by 10.4% to 7.771 million tons in the 2025 Quarter compared to 8.674 million tons in the 2024 Quarter[10] - The average sales price per ton sold for coal decreased by 6.9% to $60.29 in the 2025 Quarter compared to $64.78 in the 2024 Quarter[10] - Domestic sales are expected to exceed the 30 million ton target for 2025 due to increased contracting activity and anticipated solicitations[18] - Total sales tons for 2025 are guided to be between 32.75 million and 34.75 million short tons[20] - Illinois Basin coal sales price per ton is expected to be between $50.00 and $53.00, while Appalachia's is projected to be between $76.00 and $82.00[20] - The average coal sales price per ton for 2026 is projected to be 4-5% below the midpoint of the 2025 guidance[18] Capital Expenditures and Liquidity - Total capital expenditures for 2025 are estimated to be between $285 million and $320 million[20] - Total liquidity as of March 31, 2025, was $514.3 million, including $81.3 million in cash and cash equivalents[14] - Capital expenditures for Q1 2025 were $86.8 million, a decrease of 30% from $123.8 million in Q4 2024[48] Operating Expenses - Operating expenses for Q1 2025 were $339.4 million, down 6.7% from $363.9 million in Q4 2024 and down 16.6% from $407.1 million in Q1 2024[45] - Segment Adjusted EBITDA Expense for Coal Operations was $332.2 million in Q1 2025, a decrease of 6.2% from $354.3 million in Q4 2024 and a decrease of 17.9% from $404.7 million in Q1 2024[45] - Segment Adjusted EBITDA for Coal Operations was $140.2 million in Q1 2025, down 33.4% from $210.9 million in Q4 2024 and up 33% from $105.4 million in Q1 2024[50] - Segment Adjusted EBITDA Expense for Non-Coal Operations was $(40.3) million in Q1 2025, an improvement from $(49.7) million in Q4 2024[50] Strategic Outlook - The company added 17.7 million tons of contract commitments over the 2025-2028 period, with over 96% of projected coal sales volumes for 2025 already committed[5] - The company is focused on maintaining a strong balance sheet and disciplined capital allocation amidst trade policy uncertainties[18] - The administration's recent policy announcements are expected to extend the operating lives of several customer facilities, supporting long-term fundamentals[18] - The company remains active in pursuing high-quality, value-accretive opportunities despite challenges in capital deployment due to seller expectations[18] Market Conditions - Oil & gas royalty revenues increased by 18.7% compared to the Sequential Quarter, contributing to a $57.7 million increase in net income[4] - U.S. electricity demand is forecasted to rise by 16% over the next five years, significantly impacting coal demand and market conditions[7] - Oil & Gas royalties are expected to generate revenues from 1,550 to 1,650 thousand barrels of oil and 6,100 to 6,500 thousand MCF of natural gas[20]

Core Insights - High-quality dividend stocks have historically outperformed non-payers, with an annualized return of 9.17% compared to 4.27% over the past 50 years [3] - The current market conditions, including a correction in major indices, make dividend stocks an attractive investment option [4] Group 1: Annaly Capital Management - Annaly Capital Management offers a yield of 13.79%, averaging around 10% over the last two decades, and has declared approximately $27 billion in dividends since its IPO in 1997 [5] - The company is sensitive to interest rate changes, with recent increases in the federal funds rate impacting its net interest margin and book value [6] - The Federal Reserve's current rate-easing cycle may benefit Annaly, allowing it to adjust its asset portfolio for better profitability [7] - Annaly's portfolio primarily consists of agency securities, which provide a safety net and allow for leverage to enhance profitability [8] - With improving yield-curve conditions and historical performance during declining interest rates, Annaly's financial metrics are expected to improve [9] Group 2: Realty Income - Realty Income has a yield of 5.56% and has increased its dividend for 110 consecutive quarters, positioning it well for long-term growth despite recession concerns [11] - The company's portfolio includes 15,621 commercial real estate properties, with 91% being resilient to economic downturns [12] - Realty Income's lessees are primarily brand-name businesses, ensuring consistent traffic and rental income even during economic challenges [12] - The company has a low percentage of lessees failing to pay rent, and its funds from operations are predictable [13] - Realty Income's shares are currently trading at a 22% discount to their five-year average cash flow multiple, indicating potential value [14] Group 3: Alliance Resource Partners - Alliance Resource Partners offers a yield of 10.26%, which has been sustainable despite the industry's challenges [15] - The company has successfully locked in volume and price commitments, ensuring consistent cash flow [17] - Alliance Resource has maintained a conservative approach to production expansion, resulting in a low net debt of $221.4 million [18] - The diversification into oil and natural gas royalties allows the company to benefit from price increases in these commodities [19] - The stock is valued at approximately 8.5 times forward-year earnings, presenting a solid investment opportunity [19]

Environmental Regulations and Compliance - The EPA's Good Neighbor Plan, finalized in March 2023, aims to reduce nitrogen oxide pollution from power plants in 23 upwind states, potentially impacting the company's natural gas business [162]. - The EPA's final methane rules, issued in December 2023, establish new performance standards for GHG emissions from oil and gas facilities, with a methane emissions fee starting at $900 per metric ton in 2024 [167]. - The company is identified as a potentially responsible party under New York's climate superfund law, which requires companies emitting over 1 billion tons of GHGs to contribute to climate-related projects [170]. - The implementation of the MATS rule may lead to additional capital investments for electric power generators and could result in premature retirements of older coal-fired generating units, reducing coal demand [163]. - The EPA's NSR program may require existing coal-fired power plants to install more stringent emissions control equipment, affecting coal demand depending on the resolution of ongoing litigation [167]. - The company continues to evaluate the potential impacts of CSAPR updates and MATS on its business and financial condition [163]. - The EPA's regional haze program may restrict the construction of new coal-fired power plants and require existing plants to install additional control measures, potentially limiting coal demand [164]. - The company faces uncertainty regarding future GHG regulations under the Biden Administration, which emphasizes climate change initiatives [168]. - The ongoing legal challenges to the Good Neighbor Plan and methane rules may affect compliance costs and operational disruptions for the company [162][167]. - The EPA finalized a rule in May 2024 requiring coal-fired power plants to convert to natural gas co-firing by January 1, 2030, or cease operations by 2032, with a potential retirement deadline by 2039 [171]. - The new GHG standards could lead to additional premature retirements of coal-fired generating units, reducing coal demand [171]. - The EPA's final NSPS rule for GHG emissions from new fossil fuel-fired combustion turbines was issued in May 2024, withdrawing previous proposed amendments [172]. - Environmental advocacy groups have filed challenges claiming that federal environmental analyses do not adequately consider climate change impacts, affecting coal activities [175]. - Several states aim for 100% renewable energy in their electric generation portfolios, potentially reducing demand for coal and oil & gas [174]. - The RGGI and Western Climate Initiative are examples of regional initiatives aimed at reducing carbon dioxide emissions from power plants [176]. - Future GHG emission control initiatives may increase costs for fossil-fuel production, potentially leading customers to switch to alternative fuel sources [177]. - The EPA's authority to veto Section 404 permits could create uncertainty regarding current permits and impose additional costs on future operations [182]. - The Clean Water Act's TMDL regulations may require more costly water treatment, adversely affecting coal production [184]. - Legal uncertainties surrounding jurisdictional waters and wetlands could impact coal mining operations and permitting processes [185]. - The EPA finalized changes to the CCR regulations in May 2024, which may compel power generating companies to close existing ash ponds and could adversely affect coal demand [189]. - The 2024 ELG rule sets new discharge limits for wastewater from steam electric power generating facilities, potentially impacting the market for the company's products [190]. - The company is subject to various environmental regulations, which could increase operating costs and affect revenue [194]. - Extensive environmental regulations may impose significant emission control expenditures, impacting demand and prices for coal [298]. - Compliance with numerous federal, state, and local laws and regulations could increase operational expenses and adversely affect cash flow and profitability [299]. - Hydraulic fracturing regulations may lead to increased costs and operational restrictions, potentially affecting revenues from mineral interests [307]. - Local and state restrictions on hydraulic fracturing could incur substantial compliance costs and delays in exploration and production activities [308]. - The company faces increasing regulatory scrutiny regarding hydraulic fracturing, which could lead to higher operational costs and compliance burdens [309]. - Recent lawsuits in states like Oklahoma allege that disposal well operations have caused property damage, prompting regulators to impose stricter permitting requirements [311]. - The Texas Railroad Commission (TRRC) has ordered the indefinite suspension of all deep oil and gas-produced water injection wells in the Midland area effective December 31, 2021, due to seismic activity concerns [312]. - The Environmental Protection Agency (EPA) has introduced new methane regulations, with fees starting at $900 per metric ton of leaked methane in 2024, increasing to $1,500 by 2026 [315]. - The company may face increased compliance costs due to potential new federal and state legislation targeting greenhouse gas emissions [321]. - Climate change poses physical risks, including extreme weather events that could damage facilities and disrupt operations [322]. - The company is subject to litigation risks related to climate change, which could adversely affect its operations and financial performance [319]. - The SEC's new climate risk reporting rule is currently under legal challenge, which may impact the company's disclosure obligations [320]. Financial Performance and Risks - The company faces risks related to changes in coal prices and competition within the coal and oil & gas industry, which could adversely affect profitability [202]. - Long-term indebtedness was reported at $490.4 million as of December 31, 2024, which may limit the company's ability to borrow additional funds or make distributions [236]. - The partnership agreement allows the general partner to determine cash reserves, which could adversely affect cash distributions to unitholders [221]. - Cost reimbursements to the general partner could significantly reduce the cash available for distributions to unitholders [215]. - The company faces potential conflicts of interest due to relationships between its general partner and its affiliates, which may favor their interests over those of unitholders [222]. - Increased scrutiny on ESG practices may negatively impact the company's financial results and unit price, as stakeholders demand compliance with evolving standards [224]. - The company may be required to repay distributions if they exceed the fair value of its assets, which could create financial liabilities for unitholders [217]. - The general partner's discretion in determining the timing and amount of asset purchases and capital expenditures could affect cash distributions [225]. - The company plans to fund growth initiatives through existing cash, future cash flows, and potential debt or equity issuance, but market conditions may limit access to financing [234]. - The company faces risks related to the creditworthiness of its customers, which could adversely affect its ability to collect payments and maintain production levels [248]. - The company is subject to various legal proceedings that could have a material adverse effect on its cash flows and financial position [242]. - The company’s operations are significantly impacted by the volatility of oil, gas, and coal prices, which depend on factors beyond its control [256]. - The company’s long-term sales contracts may allow for price renegotiation, which could adversely affect operating profit margins if prices are adjusted downward [244]. - The company’s ability to pursue acquisitions and business opportunities may be limited by various restrictions in its debt agreements [239]. - The company’s reliance on digital technologies introduces risks related to cybersecurity, which could lead to operational disruptions and financial loss [249]. - Changes in taxes or tariffs related to the coal industry could adversely affect the company’s results of operations and financial position [263]. - The company’s ability to enter into new long-term sales contracts may be challenged by industry conditions, potentially exposing revenue streams to increased volatility [243]. - New tariffs imposed by the United States and retaliatory tariffs from other countries could adversely affect the company's financial position and cash flows, potentially reducing revenues and cash available for distribution [264]. - Global geopolitical tensions, including the Russian-Ukrainian conflict, have led to significant market disruptions and increased volatility in commodity prices, particularly for coal and oil & gas [265]. - Changes in consumption patterns by utilities, including a shift away from coal-fired generation, could negatively impact the demand for coal, which is closely linked to electricity demand [268]. - Future environmental regulations regarding greenhouse gas emissions may accelerate the transition to alternative fuels, adversely affecting coal demand and pricing [269]. - The company faces potential litigation and regulatory fines related to climate change, which could materially impact its financial condition and results of operations [271]. - Fluctuations in transportation costs significantly affect the total cost of coal for customers, and increases could impair the company's ability to supply coal, leading to decreased revenues [281]. - Unexpected increases in raw material costs, such as steel and petroleum products, could significantly impair operating profitability, with potential increases of $100 to $150 per short ton due to tariffs [286]. - The domestic electric power sector accounts for the majority of coal consumption, and competition from more efficient natural gas-fired plants poses a significant threat to coal-fired generation [268]. - The company may experience delays or challenges in obtaining necessary permits for coal mining operations, which could adversely affect production and profitability [280]. - Political or financial instability, labor unrest, and natural disasters could disrupt the company's ability to participate in the export market for coal sales, adversely affecting sales and results of operations [285]. - A shortage of skilled labor in coal mining has led to increased direct labor costs, adversely affecting productivity and profitability [287]. - Disruptions in supply chains and inflationary pressures have significantly impaired operating profitability, with potential reductions in production and increased costs [288]. - Inflation rates have been high in certain countries, including the United States, negatively impacting economic conditions and potentially affecting demand for coal [289]. - The company’s profitability is heavily reliant on the availability of economically recoverable coal mineral reserves, which may not be available when needed [292]. - Estimates of coal mineral reserves and resources may prove inaccurate, leading to decreased profitability due to variances from actual recoverable amounts [293]. - Regulatory constraints and geological challenges in certain mining areas could increase operational costs and affect mining efficiency [295]. - The company’s ability to obtain commercial insurance at acceptable rates is critical for risk management, with potential future increases in insurance costs due to various factors [356]. - The anticipated after-tax benefit of an investment in the company's common units largely depends on its status as a partnership for U.S. federal income tax purposes [358]. Workforce and Employee Relations - As of December 31, 2024, the company employed 3,653 full-time employees, with 3,064 in active coal mining operations [195]. - The average concentration of respirable dust samples collected was 58% below the regulatory standard, demonstrating a strong commitment to workplace safety [197]. - The company has been able to provide health and welfare benefits with no out-of-pocket premiums for employees and 100% coverage with direct contract providers [198]. - The company has a demonstrated history as a leader in safety performance in the coal mining industry, focusing on regular training and continuous monitoring [197]. - The company’s workforce has over 46% of employees with more than five years of tenure, indicating strong employee retention [195]. - The company offers competitive compensation packages, including base salary, incentive compensation, and health benefits, to attract and retain qualified personnel [196]. Market Dynamics and Sales - In 2024, the company sold 80.3% of its total tons to electric utilities in the United States, primarily to utility plants with installed pollution control devices [161]. - In 2024, the company sold approximately 83.6% of its coal sales tonnage under long-term sales contracts, which provide a relatively secure market for production [243]. - The company derived more than 10% of its total revenues from each of American Electric Power Company Inc., Louisville Gas and Electric Company, and Tennessee Valley Authority in 2024 [246].

Core Viewpoint - The article highlights the growing trend of corporate adoption of Bitcoin, with a focus on Alliance Resource Partners as a unique player in the Bitcoin space among public companies, particularly in the coal mining industry [1][9][10]. Group 1: Bitcoin Ownership Among Public Companies - A significant number of publicly traded companies are adding Bitcoin to their balance sheets, with nearly four dozen owning at least 100 Bitcoin as of late December [4]. - MicroStrategy is the largest holder, with 471,107 Bitcoin, representing 2.24% of all Bitcoin that will ever exist [5]. - Other notable companies include Marathon Holdings with 45,659 Bitcoin, Riot Platforms with 18,221 Bitcoin, and Hut 8 with 10,208 Bitcoin [7]. Group 2: Alliance Resource Partners' Unique Position - Alliance Resource Partners, primarily known for coal mining, holds 482 Bitcoin, making it one of the top 15 U.S.-based public companies in Bitcoin ownership [10][11]. - The company became involved in Bitcoin mining by utilizing excess power from its coal operations, allowing it to mine Bitcoin profitably [12]. - Unlike other companies, Alliance Resource does not purchase Bitcoin but mines it, selling a portion to cover operational expenses while retaining the rest [11][12]. Group 3: Diversification and Financial Strategy - The company is diversifying its operations due to declining coal usage in developed markets, focusing on international exports to enhance production and sales [13]. - Alliance Resource locks in volume and price commitments up to four years in advance, which supports its 10% dividend yield [14]. - The development of oil and natural gas mineral interests has been ongoing for over a decade, providing potential for increased earnings as energy commodity prices rise [15]. Group 4: Future Outlook - Bitcoin mining is currently an ancillary venture for Alliance Resource Partners, but it has the potential to improve financial flexibility if it continues to operate profitably [16].

Core Insights - Alliance Resource Partners, L.P. (ARLP) reported a challenging 4Q24, with total revenues decreasing by 5.6% year-over-year to $590.1 million, primarily due to a 2.3% decline in coal sales volumes [1] - Net income for the quarter fell to $16.3 million compared to $115.4 million in 4Q23, impacted by higher operating costs and non-cash impairment charges of $31.1 million related to the MC Mining operation [1] - Adjusted EBITDA decreased by 27.2% sequentially to $124.0 million, reflecting the operational challenges faced during the quarter [1] - Despite these challenges, ARLP remains committed to its FY25 guidance, expecting improvements driven by operational efficiencies, a strengthening order book, and declining domestic inventories [1] Financial Performance - Total revenues for 4Q24 were $590.1 million, a decrease of 5.6% year-over-year [1] - Net income dropped to $16.3 million from $115.4 million in the same quarter last year [1] - Adjusted EBITDA for the quarter was $124.0 million, down 27.2% sequentially [1] Operational Highlights - ARLP expanded its oil and gas royalties business, completing $9.6 million in mineral interest acquisitions during the quarter [6] - The company achieved its coal inventory goal for FY24, reaching 0.6 million tons [6] - ARLP ended 4Q24 with a solid liquidity position of $593.9 million, which includes $137.0 million in cash and $456.9 million in available credit [6]

Financial Data and Key Metrics Changes - For the full year 2024, total revenues were $2.4 billion, adjusted EBITDA was $714.2 million, net income was $360.9 million, and earnings per unit were $2.77 [6][15] - Total revenues for Q4 2024 were $590.1 million, down from $625.4 million in Q4 2023, primarily due to lower coal and oil and gas prices, reduced coal sales volumes, and lower transportation revenues [8][9] - Net income for Q4 2024 was $16.3 million, a significant decrease from $115.4 million in Q4 2023, attributed to lower coal sales volumes and realized prices, as well as non-cash charges [15] Business Line Data and Key Metrics Changes - Coal sales volumes for the full year 2024 were 33.3 million tons, down 1.1 million tons from 2023, mainly due to elevated customer inventories and low natural gas prices [6][9] - In Q4 2024, total coal production was 6.9 million tons, a decrease of 12.4% compared to Q4 2023, while coal sales volumes decreased 2.3% to 8.4 million tons [9][10] - In the Illinois Basin, coal sales volumes increased by 2.8% year-over-year, while in Appalachia, coal sales volumes decreased by 17.1% due to challenging mining conditions [10][11] Market Data and Key Metrics Changes - The average coal sales price per ton for the full year 2024 was $63.38, close to the record level of $64.17 achieved in 2023 [9] - The average coal sales price per ton in Q4 2024 was $59.97, a decrease of 1% year-over-year and 5.7% sequentially [9] - Oil and gas royalty revenues in Q4 2024 were $48.5 million, down 8.6% compared to Q4 2023, reflecting lower realized commodity pricing [13] Company Strategy and Development Direction - The company anticipates gradually improving market fundamentals in 2025, with a contracted order book filling up and the potential to flex additional tons to domestic or export customers [19][20] - The company plans to maintain coal sales volumes in 2025 in the range of 32.25 million to 34.25 million tons, with over 78% of these volumes committed and priced [20] - The company is focused on strategic capital improvements and has completed major infrastructure projects at several mines, which should enhance operational efficiency [30][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term outlook for coal markets, driven by expected growth in base load power demand and a focus on grid reliability [32][34] - The company noted that recent regulatory changes under the new administration could support the continued operation of coal generation assets [34][36] - Management highlighted the importance of coal in meeting growing electricity demand and indicated that utilities are considering extending coal plant operations beyond 2030 [34][36] Other Important Information - The company generated free cash flow of $383.5 million in 2024 after investing $410.9 million in coal operations [17] - The company declared a quarterly distribution of $0.70 per unit for Q4 2024, maintaining the same level as the previous quarter [18] - The company holds approximately 482 Bitcoin on the balance sheet, valued at $45 million at the end of Q4 2024 [17][36] Q&A Session Summary Question: Impact of recent tariffs on ARLP's business - Management indicated uncertainty regarding the impact of tariffs, noting that most products are domestic-based and any effects from tariffs on Canada and Mexico would be limited [43][46] Question: Confidence in reaching coal sales commitments - Management expressed confidence in reaching the 30 million ton target for domestic shipments, citing ongoing conversations with customers and expected demand [48][50] Question: Operational issues in Appalachia - Management acknowledged ongoing challenges in mining conditions but expressed optimism for improvements with upcoming longwall moves [70][72] Question: Guidance on oil and gas royalties - Management indicated a focus on maintaining a heavier weighting in oil while remaining open to gas acquisitions, depending on market conditions [84][86] Question: Pricing forecast for 2024 - Management noted that pricing will depend on supply and demand dynamics, with potential upside if weather conditions are favorable [91][93] Question: Digital asset strategy - Management plans to hold Bitcoin for potential appreciation while covering monthly expenses through sales as needed [96][98] Question: Engagement with the new administration - Management highlighted active dialogue with the administration to address regulatory concerns and promote coal's role in energy supply [100][104]

Financial Performance - Total revenues for the 2024 Quarter decreased by 5.6% to $590.1 million compared to $625.4 million for the 2023 Quarter, primarily due to reduced coal sales volumes[3]. - Net income for the 2024 Quarter was $16.3 million, a decrease of 81.1% compared to $115.4 million in the 2023 Quarter, attributed to lower revenues and higher operating expenses[3][4]. - Adjusted EBITDA for the 2024 Quarter was $124.0 million, down 33.1% from $185.4 million in the 2023 Quarter[3]. - Full year 2024 total revenue was $2.4 billion, with net income of $360.9 million and Adjusted EBITDA of $714.2 million, reflecting a decrease from $2.57 billion, $630.1 million, and $933.1 million respectively in 2023[5]. - Total revenues for Q4 2024 were $590,092, a decrease of 5.7% from $625,422 in Q4 2023[31]. - Net income attributable to ARLP for the year ended December 31, 2024, was $360,855, a decrease of 42.7% from $630,118 in 2023[31]. - Adjusted EBITDA for the year ended December 31, 2024, was $714.23 million, down from $933.08 million in 2023, reflecting a decline of 23.5%[46]. - Free cash flow for the three months ended December 31, 2024, was $75.22 million, significantly up from $3.26 million in the same period of 2023[41]. - Cash flows from operating activities for the year ended December 31, 2024, were $803.13 million, compared to $824.23 million in 2023, a decrease of 2.55%[41]. Sales and Production - Average coal sales price per ton for the 2024 Full Year was $63.38, nearly matching the record of $64.17 achieved in 2023[6]. - Coal sales amounted to $504,618 in Q4 2024, down from $521,972 in Q4 2023, reflecting a decline of 3.4%[31]. - Tons sold in Q4 2024 were 8,415, a decrease of 2.3% compared to 8,613 tons sold in Q4 2023[31]. - For 2025, the company expects coal production costs to improve, maintaining Coal segment margins near 2024 levels, with total sales tons projected between 32.25 million and 34.25 million short tons[16][18]. - The guidance for coal sales price per ton sold is projected at $57.00 to $61.00, with Illinois Basin sales price between $50.00 and $53.00 and Appalachia between $76.00 and $82.00[18]. Oil & Gas Segment - The company completed $9.6 million in oil & gas mineral interest acquisitions during the fourth quarter[3]. - Record full year 2024 oil & gas royalty volumes reached 3.4 million BOE, an increase of 9.6% year-over-year[3]. - Segment Adjusted EBITDA for the Oil & Gas Royalties segment decreased to $25.6 million in the 2024 Quarter, down 17.6% from $31.0 million in the 2023 Quarter[12]. - The company aims to actively pursue growth in the Oil & Gas Royalties segment in 2025, leveraging its cash flow generation profile[16]. - Oil & Gas Royalties are expected to produce 1,550 to 1,650 thousand barrels of oil and 6,100 to 6,500 thousand MCF of natural gas in 2025[18]. Expenses and Liabilities - Operating expenses for the year ended December 31, 2024, were $2,054,579, an increase of 8.5% from $1,894,304 in 2023[31]. - Operating expenses for the three months ended December 31, 2024, increased to $407.09 million from $356.56 million in 2023, marking a rise of 14.1%[43]. - The company recorded asset impairments of $31.13 million for the year ended December 31, 2024, with no impairments reported in 2023[39]. - The litigation expense accrual for the year ended December 31, 2024, was $15.25 million, related to a settlement subject to court approval[39]. - As of December 31, 2024, total debt and finance leases outstanding were $490.8 million, with a total liquidity of $593.9 million, including $137.0 million in cash and cash equivalents[14]. Cash Distribution and Capital Expenditures - The Board approved a cash distribution of $0.70 per unit for the 2024 Quarter, consistent with previous quarters, resulting in an annualized rate of $2.80 per unit[15]. - Capital expenditures for 2024 were $428,741, up from $379,338 in 2023, indicating a 13% increase[33]. - The company expects average annual estimated maintenance capital expenditures to decrease to $7.28 per ton produced in 2025 from $7.76 per ton in 2024[40]. - The company anticipates total capital expenditures between $285 million and $320 million, with maintenance capital expenditures projected at $280 million to $310 million[18]. Assets and Liquidity - Cash and cash equivalents increased to $136,962 at the end of 2024, up from $59,813 at the end of 2023[32]. - Total assets rose to $2,915,730 in 2024, compared to $2,788,426 in 2023, marking an increase of 4.6%[32]. - The company holds 482 bitcoins valued at $45.0 million as of December 31, 2024, contributing to its liquidity[14]. Regulatory Environment - The company expects a more supportive regulatory environment to enhance energy security and address the need for affordable baseload power[16].

Financial Performance - Total revenues for Q3 2024 decreased by 3.6% to $613.6 million compared to $636.5 million in Q3 2023, primarily due to reduced coal sales prices and lower transportation revenues [140]. - Net income attributable to the company for Q3 2024 was $86.3 million, or $0.66 per unit, down from $153.7 million, or $1.18 per unit, in Q3 2023, reflecting lower revenues and increased operating expenses [143]. - Total revenues for the nine months ended September 30, 2024, decreased 4.3% to $1.86 billion compared to $1.94 billion for the same period in 2023, mainly due to lower coal sales and transportation revenues [159]. - Net income attributable to the company for the 2024 Period was $344.5 million, or $2.64 per unit, down from $514.7 million, or $3.93 per unit, in the 2023 Period [161]. Coal Operations - Coal sales decreased to $532.6 million in Q3 2024 from $549.1 million in Q3 2023, driven by a 2.1% decline in average coal sales prices and lower tons sold [144]. - Segment Adjusted EBITDA for coal operations increased by 10.9% to $386.3 million, with per ton costs rising 11.9% to $46.11 per ton sold in Q3 2024 [145]. - Segment Adjusted EBITDA decreased by $55.4 million to $192.3 million in Q3 2024 from $247.7 million in Q3 2023 [152]. - Segment Adjusted EBITDA for Illinois Basin Coal Operations decreased 13.4% to $114.6 million in Q3 2024 from $132.4 million in Q3 2023, primarily due to lower coal sales volumes and higher operating expenses [156]. - Appalachia Coal Operations saw a 49.9% decrease in Segment Adjusted EBITDA to $37.5 million in Q3 2024 from $74.8 million in Q3 2023, attributed to lower coal sales and higher operating expenses [157]. - Coal sales decreased to $1.61 billion for the 2024 Period compared to $1.69 billion for the 2023 Period, with a 3.6% decrease in sales volumes primarily due to reduced domestic demand [163]. - Segment Adjusted EBITDA Expense for coal operations increased 7.4% to $1.10 billion, with per ton costs rising 11.4% to $44.04 per ton sold in the 2024 Period [164]. - Illinois Basin Coal Operations reported a 2.9% increase in coal sales to $1.04 billion, while Segment Adjusted EBITDA decreased by 2.9% to $373.0 million [177]. - Appalachia Coal Operations experienced a 47.8% decline in Segment Adjusted EBITDA to $157.1 million, with coal sales decreasing by 16.3% to $566.8 million [178]. - Coal Royalties Segment Adjusted EBITDA rose to $33.5 million, reflecting higher average royalty rates and increased tons sold [180]. Transportation Revenues - Transportation revenues decreased to $24.6 million in Q3 2024 from $35.0 million in Q3 2023, attributed to lower average third-party transportation rates and decreased coal shipments [151]. - Transportation revenues decreased by $13.6 million to $82.1 million in the 2024 Period, primarily due to decreased coal shipments [169]. Operating Expenses - Total operating expenses increased to $1.48 billion in the 2024 Period from $1.38 billion in the 2023 Period, primarily due to higher cost purchased coal and a $15.3 million litigation expense accrual [160]. - Segment Adjusted EBITDA Expense increased by 8.5% to $1.12 billion, primarily due to higher operating expenses across segments [1]. Cash Flow and Investments - Cash provided by operating activities decreased to $634.7 million in the 2024 Period from $730.3 million in the 2023 Period [190]. - Net cash used in investing activities decreased to $337.4 million for the 2024 Period from $439.4 million in the 2023 Period, primarily due to reduced acquisitions of oil & gas reserves [191]. - Net cash used in financing activities decreased to $161.7 million for the 2024 Period from $389.7 million in the 2023 Period, mainly due to the issuance of Senior Notes and borrowings under Equipment Financing [192]. - The company anticipates total capital expenditures for 2024 to be in the range of $420.0 million to $460.0 million, with average estimated annual maintenance capital expenditures projected at approximately $7.76 per ton produced [193]. - As of September 30, 2024, the company had $195.4 million in cash and cash equivalents, which is expected to be sufficient to meet 2024 cash requirements [193]. Oil & Gas Operations - The company owns oil & gas mineral interests in approximately 69,000 net royalty acres in premier producing regions, supporting its strategy to grow its oil & gas mineral interest business [129]. - The company has committed up to $25.0 million to acquire additional oil & gas mineral interests in the Midland and Delaware Basins for an additional one-year term [131]. - Oil & Gas Royalties Segment Adjusted EBITDA decreased 8.5% to $28.7 million in Q3 2024 compared to $31.4 million in Q3 2023, driven by reduced average sales prices despite an 11.9% increase in volumes sold [158]. - Oil & Gas Royalties Segment Adjusted EBITDA increased to $91.4 million, driven by a 12.3% rise in oil & gas volumes to 2,579 MBOE [179]. Risk Factors - The company is exposed to commodity price risks, particularly in coal, oil, and natural gas, which could significantly impact revenues if prices decline [200]. - Credit risk is primarily associated with domestic electric power generators and reputable global brokerage firms, with measures in place to evaluate and monitor customer creditworthiness [202]. - The company does not have material exposure to currency exchange-rate risks as most transactions are in U.S. dollars, but foreign competitors may gain advantages from currency fluctuations [203]. - Borrowings under the Revolving Credit Facility and Securitization Facility are at variable rates, exposing the company to interest rate risks [204]. - There were no significant changes in the company's quantitative and qualitative disclosures about market risk compared to the previous annual report [205].