ARLP — Alliance Resource Partners, L.P.

Summary of ARLP Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Total Revenues: $551.6 million, up 6.9% sequentially and higher compared to Q2 2025.
• Net Income: $79.6 million, a 33.9% increase year-over-year, translating to $0.61 per unit.
• Adjusted EBITDA: $185.7 million, up 14.7% year-over-year and 19.8% sequentially.
• Coal Sales Volumes: 8.6 million tons, up 2.1% year-over-year and 8.9% sequentially.
• Average Coal Sales Price: $54.87 per ton, down 5.3% year-over-year.
• Distributable Cash Flow: $108.2 million, with a distribution coverage ratio of 1.39x, a 39% increase from the previous quarter.
• Debt: Total debt of $590.2 million, with total liquidity at $424 million.

2. Strategic Updates and Business Highlights

• Acquisition: Completed the acquisition of AllDale Minerals III and IV for $206.2 million, expected to enhance the Oil & Gas Royalties segment.
• Coal Operations: Strong performance in coal operations, particularly in the Illinois Basin and Appalachia, with improved productivity and cost efficiencies.
• Sales Commitments: Secured 21.2 million tons of new sales commitments, including 18.5 million tons domestically over five years and 2.7 million tons for export.
• Operational Efficiency: Notable improvements in coal production and cost management, particularly at the Hamilton and Tunnel Ridge mines.

3. Forward Guidance and Outlook

• Coal Sales Volume Guidance: Maintained at 33.75 million to 35.25 million tons for 2026.
• Coal Sales Price Guidance: Expected to be between $54 and $56 per ton.
• Cost Guidance: Adjusted EBITDA expense guidance of $37 to $39 per ton.
• Oil & Gas Royalties Volume Guidance: Increased to 1.95 to 2.05 million barrels of oil and 10 to 10.5 million Mcf of natural gas for the full year.

4. Challenges and Points of Concern

• Declining Coal Prices: Average coal sales price per ton decreased due to the roll-off of higher-priced contracts, particularly in the Appalachia region.
• Inventory Levels: Total coal inventory decreased to 0.8 million tons, which may indicate tighter supply management but could also reflect demand fluctuations.
• Market Conditions: Lower domestic coal demand in the first half of 2026 due to mild weather and reduced natural gas prices could impact future sales.

5. Notable Q&A Insights

• Capital Allocation: Management expressed a balanced approach to capital allocation, focusing on debt reduction, potential incremental M&A, and maintaining shareholder returns.
• Volume Projections: Management expects a significant increase in production from the Hamilton mine in Q3, which should help drive down costs.
• Pricing Stability: Management indicated that coal pricing is expected to stabilize in the second half of the year, consistent with Q2 levels.
• Long-term Demand: There is confidence in increasing electricity demand driven by data centers, with expectations for coal to remain a critical component of energy supply.

Overall, ARLP reported strong financial results for Q2 2026, driven by operational efficiencies and strategic acquisitions, while also navigating challenges related to coal pricing and market demand. The outlook remains positive, with a focus on maintaining financial flexibility and exploring growth opportunities.