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Core Insights - Alliance Resource Partners, L.P. (ARLP) has shown limited movement since the last review in late October, indicating a stable position amidst rising demand in the sector [1] Company Analysis - The focus is on undervalued and disliked companies with strong fundamentals and cash flows, particularly in sectors like Oil & Gas and consumer goods [1] - Energy Transfer is highlighted as a company that was previously overlooked but now presents a compelling investment opportunity [1] - The investment strategy emphasizes long-term value investing while also exploring potential deal arbitrage opportunities in various sectors [1] Investment Philosophy - The company tends to avoid investments in high-tech and certain consumer goods sectors, favoring more traditional and understandable products [1] - There is skepticism towards cryptocurrencies, reflecting a preference for more established investment avenues [1] Community Engagement - The aim is to connect with like-minded investors through platforms like Seeking Alpha, fostering a collaborative environment for sharing insights and decision-making [1]

Core Viewpoint - Alliance Resource Partners, L.P. (ARLP) has shown limited movement since the last review in late October, despite a surge in demand for its services [1] Group 1: Company Analysis - The focus is on analyzing undervalued and disliked companies or industries with strong fundamentals and good cash flows, particularly in sectors like Oil & Gas and consumer goods [1] - Energy Transfer is highlighted as a company that was previously overlooked but is now considered a strong investment opportunity [1] - The investment strategy emphasizes long-term value investing while also exploring potential deal arbitrage opportunities, such as those involving Microsoft/Activision Blizzard and Spirit Airlines/JetBlue [1] Group 2: Investment Philosophy - The company tends to avoid investments in high-tech or certain consumer goods sectors, preferring more traditional products like Levi's jeans [1] - There is skepticism towards cryptocurrencies as a viable investment option [1] - The aim is to connect with like-minded investors through platforms like Seeking Alpha to share insights and foster a collaborative investment community [1]

Financial Performance - Alliance Resource Partners, L.P. reported a fourth quarter EBITDA of $191.1 million, reflecting a 54.1% increase year over year, resulting in a free cash flow of $93.8 million after Capex adjustments [1] - The royalties segment achieved a record year with an adjusted EBITDA contribution of $30 million for 2025, indicating strong performance in oil and gas royalties [4] Market Conditions - Average coal sale prices decreased by 4% year over year due to the expiration of higher-priced legacy contracts and lower coal sales volumes, which were affected by the timing of committed deliveries [2] - Despite the revenue decline, increased production and inventory suggest significant earnings potential in upcoming quarters, supported by favorable long-term and short-term industry conditions [3] Valuation - The company appears undervalued with a price to earnings ratio that is 44% lower than coal peers and 51% lower than oil peers, despite generating record free cash flow and maintaining a strong balance sheet [5]

Core Insights - Alliance Resource Partners (ARLP) reported higher profitability in Q4 2025 despite lower revenue, driven by reduced operating expenses, lower impairment charges, and increased investment income [6][4] Production and Sales - Coal production reached 8.2 million tons, an increase from 6.9 million tons in the prior-year quarter, while coal sales volumes were 8.1 million tons, down from 8.4 million tons a year earlier [1] - In the Illinois Basin, coal sales volumes were 6.5 million tons, down about 2% year-over-year and sequentially, attributed to the timing of committed deliveries [7] - Appalachia coal sales volumes were 1.7 million tons, down from 1.8 million tons in the year-ago quarter and 2.1 million tons sequentially [8] Financial Performance - Total revenue for the quarter was $535.5 million, down from $590.1 million a year earlier, primarily due to lower coal sales and transportation revenue [3] - Adjusted EBITDA for Q4 2025 totaled $191.1 million, up 54.1% from Q4 2024 and up 2.8% sequentially [5] - Net income attributable to ARLP was $82.7 million, or $0.64 per unit, compared to $16.3 million, or $0.12 per unit, in the prior-year quarter [5] Cost and Pricing - Average coal sales price was $57.57 per ton, down 4% year-over-year and down 2.1% sequentially [2] - Segment Adjusted EBITDA Expense per ton sold was $40.24, down 16.3% year-over-year and down 1.8% sequentially [1] Royalty Segment - The royalty segment generated $56.8 million in revenue, up 17.2% year-over-year, attributed to higher coal royalty tons and record oil and gas volumes [12] - Oil and gas royalty volumes rose 20.2% year-over-year and 10% sequentially, producing segment adjusted EBITDA of $30 million [13] Balance Sheet and Cash Flow - As of December 31, 2025, ARLP reported total liquidity of $518.5 million, including $71.2 million in cash [15] - Free cash flow generated in the quarter was $93.8 million, with a distributable cash flow of $100.1 million [16] 2026 Outlook - Management provided guidance for 2026, indicating robust contracting activity with over 93% of expected volumes committed [17] - Coal sales volumes are expected to be between 33.75 million to 35.25 million tons, with pricing anticipated to be 3% to 6% lower than Q4 2025 levels [18] - Capital expenditures are projected to be between $280 million to $300 million for 2026 [18]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q4 2025 was $191.1 million, a 54.1% increase from Q4 2024 and a 2.8% increase sequentially [4] - Net income attributable to ARLP in Q4 2025 was $82.7 million, or $0.64 per unit, compared to $16.3 million, or $0.12 per unit, in Q4 2024 [4] - Total revenues for Q4 2025 were $535.5 million, down from $590.1 million in Q4 2024, primarily due to lower coal sales and transportation revenues [5] Business Line Data and Key Metrics Changes - Average coal sales price per ton in Q4 2025 was $57.57, a 4% decrease year-over-year and a 2.1% decrease sequentially [6] - Total coal production in Q4 2025 was 8.2 million tons, up from 6.9 million tons in Q4 2024, while coal sales volumes were 8.1 million tons, down from 8.4 million tons in Q4 2024 [6] - In the Illinois Basin, coal sales volumes were 6.5 million tons in Q4 2025, down approximately 2% compared to both Q4 2024 and the sequential quarter [7] - In the Appalachia region, coal sales volumes were 1.7 million tons in Q4 2025, down from 1.8 million tons in Q4 2024 [8] Market Data and Key Metrics Changes - The oil and gas royalty segment achieved total revenue of $56.8 million in Q4 2025, up 17.2% year-over-year [11] - BOE volumes in the oil and gas royalty segment increased 20.2% year-over-year and 10% sequentially [11] - Total liquidity as of December 31, 2025, was $518.5 million, including $71.2 million in cash and cash equivalents [13] Company Strategy and Development Direction - The company anticipates overall coal sales volumes for 2026 to increase to 33.75-35.25 million tons, despite reduced sales volumes at the Mettiki mine [14] - Contracting activity for 2026 is robust, with over 93% of expected volumes already committed and priced at the midpoint of guidance [14] - The company remains committed to investing in its oil and gas royalties business and pursuing disciplined growth in this segment [17] Management's Comments on Operating Environment and Future Outlook - Management highlighted strong performance in the Illinois Basin and robust customer demand, with utilities opting for longer-term agreements [19] - The company noted that coal's value to the grid is increasingly recognized, especially during extreme weather events [26] - Management expects demand fundamentals to strengthen, driven by higher natural gas prices and load growth from data centers and U.S. manufacturing [25] Other Important Information - The company ended Q4 2025 with 1.1 million tons of coal inventory, an increase compared to previous quarters [10] - The anticipated impact of reduced sales volumes at Mettiki is reflected in the 2026 guidance, with potential impairment evaluations planned for Q1 2026 [10] Q&A Session Summary Question: What does it take to get to the high or low end of your price per ton guidance? - Management indicated that most remaining tons to be sold are in the Illinois Basin, with potential upside depending on customer contract flexibilities [33] Question: What would it take for Alliance to increase production? - Management stated that no new units are planned, but productivity improvements are expected to drive growth [39] Question: How to model equity method investments going forward? - Management suggested a lower run rate of around $3 million per quarter for equity investment income moving forward [41] Question: How should we think about quarterly sales cadence in 2026? - Management expects Q1 2026 to be the lowest sales quarter, with gradual improvement anticipated in subsequent quarters [47] Question: How do you expect export sales to compare to 2025 levels? - Management noted that export sales are limited, focusing primarily on domestic customers due to higher netbacks [50]

Financial Data and Key Metrics Changes - For Q4 2025, adjusted EBITDA was $191.1 million, up 54.1% from Q4 2024 and up 2.8% sequentially from Q3 2025 [4] - Net income attributable to ARLP in Q4 2025 was $82.7 million, or $0.64 per unit, compared to $16.3 million, or $0.12 per unit, in Q4 2024 [4] - Total revenues were $535.5 million in Q4 2025, down from $590.1 million in Q4 2024, primarily due to lower coal sales and transportation revenues [5] Business Line Data and Key Metrics Changes - Average coal sales price per ton for Q4 2025 was $57.57, a 4% decrease year-over-year and a 2.1% decrease sequentially [6] - Total coal production in Q4 2025 was 8.2 million tons, compared to 6.9 million tons in Q4 2024 [6] - In the Illinois Basin, coal sales volumes were 6.5 million tons in Q4 2025, down approximately 2% compared to both Q4 2024 and Q3 2025 [7] - In Appalachia, coal sales volumes were 1.7 million tons in Q4 2025, down from 1.8 million tons in Q4 2024 [8] Market Data and Key Metrics Changes - The oil and gas royalty segment achieved total revenue of $56.8 million in Q4 2025, up 17.2% year-over-year [11] - BOE volumes increased 20.2% year-over-year and 10% sequentially in Q4 2025 [11] - Total liquidity as of December 31, 2025, was $518.5 million, including $71.2 million in cash [13] Company Strategy and Development Direction - The company anticipates overall coal sales volumes for 2026 to increase to 33.75 million tons - 35.25 million tons, despite reduced sales volumes at the Mettiki Mine [14] - Contracting activity for 2026 is robust, with over 93% of expected volumes already committed and priced [14] - The company remains committed to investing in its oil and gas royalties business and pursuing disciplined growth in this segment [17] Management's Comments on Operating Environment and Future Outlook - Management highlighted strong contracting activity and a favorable supply-demand dynamic as utilities opt for longer-term agreements [19] - The company noted that coal's value to the grid is increasingly recognized, especially during extreme weather events [26] - Management expects demand growth driven by data centers and industrial development, which will support coal pricing [25] Other Important Information - The company ended Q4 2025 with 1.1 million tons of coal inventory, an increase compared to previous quarters [10] - The anticipated impact of reduced sales volumes at Mettiki is reflected in the 2026 guidance, with potential impairment evaluations planned for Q1 2026 [10] Q&A Session Summary Question: What does it take to get to the high or low end of your price per ton guidance? - Management indicated that most remaining tons to be sold are in the Illinois Basin, with potential upside depending on customer contract flexibilities [34] Question: What would it take for Alliance to increase production? - Management stated that no new units are planned, but productivity improvements are expected to drive growth [40] Question: Any thoughts on modeling equity method investments going forward? - Management suggested a lower run rate of around $3 million per quarter for equity investment income moving forward [43] Question: How should we think about quarterly sales cadence in 2026? - Management expects Q1 2026 to be the lowest sales quarter, with gradual improvement anticipated in subsequent quarters [49] Question: How do you expect export sales to compare to 2025 levels? - Management noted that export sales are limited, focusing primarily on domestic customers due to higher netbacks [51]

Financial Data and Key Metrics Changes - For Q4 2025, adjusted EBITDA was $191.1 million, up 54.1% from Q4 2024 and up 2.8% sequentially from Q3 2025 [4] - Net income attributable to ARLP in Q4 2025 was $82.7 million, or $0.64 per unit, compared to $16.3 million, or $0.12 per unit, in Q4 2024 [4] - Total revenues were $535.5 million in Q4 2025, down from $590.1 million in Q4 2024, primarily due to lower coal sales and transportation revenues [5] Business Line Data and Key Metrics Changes - Average coal sales price per ton for Q4 2025 was $57.57, a 4% decrease year-over-year and a 2.1% decrease sequentially [6] - Total coal production in Q4 2025 was 8.2 million tons, compared to 6.9 million tons in Q4 2024 [6] - In the Illinois Basin, coal sales volumes were 6.5 million tons in Q4 2025, down approximately 2% compared to both Q4 2024 and Q3 2025 [7] - In Appalachia, coal sales volumes were 1.7 million tons in Q4 2025, down from 1.8 million tons in Q4 2024 [9] Market Data and Key Metrics Changes - The oil and gas royalty segment achieved total revenue of $56.8 million in Q4 2025, up 17.2% year-over-year [12] - BOE volumes increased 20.2% year-over-year and 10% sequentially in Q4 2025 [12] - Total liquidity as of December 31, 2025, was $518.5 million, including $71.2 million in cash [14] Company Strategy and Development Direction - The company anticipates overall coal sales volumes for 2026 to increase to 33.75-35.25 million tons, despite reduced sales volumes at the Mettiki mine [15] - Contracting activity for 2026 is robust, with over 93% of expected volumes already committed and priced [15] - The company remains committed to investing in its oil and gas royalties business and pursuing disciplined growth in this segment [19] Management's Comments on Operating Environment and Future Outlook - Management highlighted strong contracting activity and a favorable supply-demand dynamic as utilities opt for longer-term agreements [21] - The company noted that coal generation played a critical stabilizing role during recent winter weather events, reinforcing coal's value to the grid [25] - Management expressed confidence in the long-term demand growth driven by data centers and industrial development [26] Other Important Information - The company ended Q4 2025 with 1.1 million tons of coal inventory, an increase compared to previous quarters [11] - The anticipated impact of reduced sales volumes at Mettiki is reflected in the 2026 guidance, with potential impairment evaluations planned for Q1 2026 [11] Q&A Session Summary Question: What does it take to get to the high or low end of your price per ton guidance? - Most remaining tons to be sold are in the Illinois Basin, with some optionality for customers that could influence pricing [35] Question: What would it take for Alliance to increase production? - The company does not plan to add any units but may improve productivity through existing operations [40] Question: How to model equity method investments going forward? - A lower run rate of approximately $3 million per quarter is suggested for future modeling [43] Question: How should we think about quarterly sales cadence in 2026? - The first quarter is expected to be the lowest, with gradual improvement anticipated in subsequent quarters [48] Question: How do you expect export sales to compare to 2025 levels? - The focus remains on domestic customers, with limited exposure to the export market [50]

Financial Performance - Fourth quarter 2025 net income increased by $66.3 million to $82.7 million, or $0.64 per unit, compared to $16.3 million, or $0.12 per unit for the 2024 Quarter [3]. - Full year 2025 total revenue was $2.19 billion, a decrease of 10.4% from $2.45 billion in 2024, with net income of $311.2 million, down from $360.9 million [7]. - Net income attributable to ARLP for the year 2025 was $311,163, a decline of 13.7% compared to $360,855 in 2024, with earnings per limited partner unit decreasing to $2.40 from $2.77 [37]. - Net income attributable to ARLP for the three months ended December 31, 2025, was $82.666 million, a significant increase from $16.330 million in the same period of 2024 [45]. - Adjusted EBITDA for the year ended December 31, 2025, was $698.739 million, compared to $714.230 million for the year ended December 31, 2024 [45]. - Adjusted EBITDA for the fourth quarter 2025 was $191.1 million, an increase of 54.1% compared to $124.0 million in the 2024 Quarter [5]. - Free cash flow for the three months ended December 31, 2025, was $93.846 million, up from $75.216 million in the same period of 2024 [48]. - The distribution coverage ratio for the year ended December 31, 2025, was 1.13, compared to 1.10 for the year ended December 31, 2024 [45]. Revenue and Sales - Total revenues for the fourth quarter 2025 decreased by 9.2% to $535.5 million, down from $590.1 million in the 2024 Quarter, primarily due to lower coal sales and transportation revenues [4]. - Total revenues for the year ended December 31, 2025, were $2,194,811, down 10.4% from $2,448,708 in 2024, with coal sales contributing $1,932,515, a decrease of 8.5% from $2,111,803 [37]. - Customer demand remains strong, with over 93% of the 2026 sales tons guidance already committed and priced [20]. Coal Operations - Coal production volumes for the fourth quarter 2025 increased to 8.2 million tons, representing an 18.7% year-over-year increase [4]. - Segment Adjusted EBITDA for Coal Operations increased by 36.7% to $144.0 million in the fourth quarter 2025 compared to $105.4 million in the 2024 Quarter [9]. - In Q4 2025, tons sold were 8,111, a decrease of 3.6% from 8,415 tons in Q4 2024, while tons produced increased by 18.6% to 8,189 from 6,901 tons [37]. - For 2026, coal royalty tons sold are expected to reach six million tons, representing a 25% increase compared to 2025 [20]. - The guidance for total coal sales tons in 2026 is projected between 33.75 million and 35.25 million short tons, with Illinois Basin sales tons estimated at 26.00 to 27.00 million [22]. - The expected coal sales price per ton sold for the Illinois Basin is projected to be between $50.00 and $52.00, while for Appalachia it is between $66.00 and $71.00 [22]. - ARLP anticipates segment adjusted EBITDA expense per ton sold to be between $33.00 and $35.00 for the Illinois Basin and between $49.00 and $53.00 for Appalachia [22]. Expenses and Liabilities - Operating expenses for the year 2025 totaled $1,809,508, down 12% from $2,054,579 in 2024, primarily due to lower coal production costs [37]. - Operating expenses for the three months ended December 31, 2025, were $328.193 million, a decrease from $407.090 million in the same period of 2024 [50]. - Total debt and finance leases as of December 31, 2025, were $463.7 million, with total and net leverage ratios of 0.66 times and 0.56 times, respectively [17]. - Current liabilities decreased to $204,426 in 2025 from $233,142 in 2024, reflecting improved liquidity management [38]. Capital Expenditures and Investments - The company made capital expenditures of $263,280 in 2025, down from $428,741 in 2024, indicating a focus on cost control [39]. - ARLP's total capital expenditures for 2026 are projected to be between $280 million and $300 million [22]. - The average annual estimated maintenance capital expenditures for 2026 are projected to be $7.23 per ton produced, slightly lower than the $7.28 per ton in 2025 [47]. - The company completed $14.4 million in oil and gas mineral acquisitions during the 2025 Quarter and aims to continue expanding its minerals portfolio [20]. - The company plans to continue exploring oil and gas reserve business combinations, with a commitment of $10,000 in 2025 [39]. Liquidity and Assets - As of December 31, 2025, ARLP reported total liquidity of $518.5 million, including $71.2 million in cash and cash equivalents and $447.3 million in available borrowings [18]. - The company reported a total asset value of $2,853,788 as of December 31, 2025, a slight decrease from $2,915,730 in 2024 [38]. - Digital assets increased to $51,834 in 2025 from $45,037 in 2024, reflecting ongoing investment in digital technologies [38]. Other Financial Metrics - The partnership declared a quarterly cash distribution of $0.60 per unit, or $2.40 per unit annualized, on January 27, 2026 [4]. - The cash distribution approved for the 2025 Quarter is $0.60 per unit, translating to an annualized rate of $2.40 per unit, payable on February 13, 2026 [19]. - The company recorded a litigation expense accrual of $15.3 million related to certain settlements [47]. - The net loss on equity method investments for the year ended December 31, 2025, was $20.976 million, compared to a gain of $4.961 million in 2024 [45].

Core Viewpoint - Alliance Resource Partners, L.P. has declared a quarterly distribution of $0.60 per unit, indicating a commitment to returning value to its unitholders [1] Group 1 - The distribution amount of $0.60 per unit reflects the company's ongoing financial health and operational performance [1] - This quarterly distribution is part of the company's strategy to maintain investor confidence and attract potential investors [1]