Sign in

You're signed outSign in or to get full access.

AR

ALLIANCE RESOURCE PARTNERS LP (ARLP)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $590.1M and EPS was $0.12, down sharply year over year and sequentially as lower coal and O&G prices, Appalachia mining issues, and non-cash items (long-term liability accruals and a $31.1M impairment at MC Mining) pressured results . Adjusted EBITDA was $124.0M versus $185.4M in Q4 2023 and $170.4M in Q3 2024 .
  • Management guided 2025 coal sales tons to 32.25–34.25M with lower realized pricing, but materially improved costs per ton to keep coal margins near 2024 levels; O&G royalty volumes are guided to another record year; total capex is projected down materially to $285–$320M .
  • Operational headwinds in Appalachia (Tunnel Ridge, Mettiki) and unfavorable export netbacks for high sulfur coal weighed on Q4; two longwall moves in Feb and a district change at Tunnel Ridge in May are expected to improve costs and volumes through 2025 .
  • Strategic positives include a strong contracted order book (26M tons committed for 2025; 78% committed at the midpoint), normalized inventories, and an expectedly more supportive regulatory backdrop; distribution held at $0.70 per unit .
  • Stock reaction catalysts: non-cash impairment/accruals depressing EPS, lowered 2025 realized coal prices offset by cost improvements, rising O&G royalty volumes, and management’s commentary on AI/data-center-driven baseload demand and regulatory tailwinds .

What Went Well and What Went Wrong

What Went Well

  • Contracted order book and pricing resilience: 2024 average coal price per ton of $63.38 was near 2023’s record despite market pressure; Q4 total coal ASP was $59.97 . CEO: “our average coal sales price per ton for the 2024 Full Year of $63.38 came close to the record level achieved in the 2023 Full Year” .
  • O&G royalties: Q4 volumes +1.7% YoY and coal royalty tons +9.4% YoY; management guides record O&G volumes in 2025 .
  • Cost/Capex outlook: 2025 total capex down significantly to $285–$320M as multi-year mine infrastructure projects wrap up; segment cost per ton guided lower across regions (IB: $35–$38; Appalachia: $53–$60) .

What Went Wrong

  • Appalachia mining conditions: Reduced shipments and recoveries, with Tunnel Ridge production 466k tons below expectations; Appalachia segment EBITDA per ton rose 20.9% YoY; segment EBITDA fell to $7.0M .
  • Export netbacks: High-sulfur export pricing inferior to domestic alternatives; ~600k tons remain contingent on export price improvement .
  • EPS compressed by non-cash items: $13.1M long-term liability accruals and a $31.1M impairment drove Q4 net income down to $16.3M vs $115.4M YoY .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$625.4 $613.6 $590.1
Diluted EPS ($/unit)$0.88 $0.66 $0.12
Adjusted EBITDA ($USD Millions)$185.4 $170.4 $124.0
Net Income Margin (%)18.5% 14.1% 2.8%
Adjusted EBITDA Margin (%)29.7% 27.8% 21.0%
Total Coal ASP ($/ton)$60.60 $63.57 $59.97

Segment breakdown (coal operations and royalties):

Segment KPIQ4 2023Q3 2024Q4 2024
Illinois Basin: Tons sold (M)6.419 5.967 6.596
Illinois Basin: ASP ($/ton)$55.06 $56.61 $54.38
Illinois Basin: EBITDA exp/ton ($)$35.26 $37.79 $39.77
Illinois Basin: Segment EBITDA ($M)$130.1 $114.6 $101.0
Appalachia: Tons sold (M)2.194 2.412 1.819
Appalachia: ASP ($/ton)$76.82 $80.78 $80.23
Appalachia: EBITDA exp/ton ($)$63.52 $65.42 $76.79
Appalachia: Segment EBITDA ($M)$29.8 $37.5 $7.0
Total Coal: Tons sold (M)8.613 8.379 8.415
Total Coal: ASP ($/ton)$60.60 $63.57 $59.97
Total Coal: EBITDA exp/ton ($)$42.91 $46.11 $48.09
Total Coal: Segment EBITDA ($M)$156.2 $149.3 $105.4
O&G Royalties: BOE sold (M)0.809 0.864 0.823
O&G Royalties: Avg price/BOE ($)$44.60 $39.87 $36.94
O&G Royalties: Segment EBITDA ($M)$31.0 $28.7 $25.6
Coal Royalties: Tons sold (M)5.018 5.109 5.491
Coal Royalties: Rev/ton ($)$3.33 $3.26 $3.23
Coal Royalties: Segment EBITDA ($M)$10.2 $11.1 $10.5

KPIs

KPIQ4 2023Q3 2024Q4 2024
Coal inventory (M tons)1.3 2.0 0.6
Distribution ($/unit)$0.70 $0.70 $0.70
Total liquidity ($M)—$657.7 $593.9
Cash & equivalents ($M)$59.8 $195.4 $137.0
Leverage: Total / Net (x)—0.64 / 0.39 0.69 / 0.50
Bitcoins held / value—482 / $45.0M 482 / $45.0M

Guidance Changes

MetricPeriodPrevious Guidance (Q3 2024 release)Current Guidance (Q4 2024 release)Change
Total coal sales tons (M)FY2024: 33.50–34.50 2025: 32.25–34.25 Slightly lower range (new FY)
IB sales tons (M)FY2024: 24.25–25.0 2025: 23.5–25.0 Lower low-end
Appalachia sales tons (M)FY2024: 9.25–9.50 2025: 8.75–9.25 Lower
Total coal ASP ($/ton)FY2024: $63.75–$64.50 2025: $57.00–$61.00 Lower (pricing reset)
Segment EBITDA expense/ton (Total)FY2024: $43–$45 2025: $40–$44 Lower (cost improvement)
IB ASP ($/ton)FY2024: $56.25–$57.00 2025: $50–$53 Lower
Appalachia ASP ($/ton)FY2024: $83–$84 2025: $76–$82 Lower
IB EBITDA expense/ton ($)FY2024: $36–$38 2025: $35–$38 Slightly lower low-end
Appalachia EBITDA expense/ton ($)FY2024: $57–$60 2025: $53–$60 Lower low-end
O&G royalties volumesFYOil: 1,500–1,600; Gas: 5,800–6,200; NGL: 750–800 Oil: 1,550–1,650; Gas: 6,100–6,500; NGL: 775–825 Raised
Coal royalties tons (M)FY20.4–21.5 23.75–25.25 Raised
DDA ($M)FY2024: $280–$300 2025: $270–$290 Lower
G&A ($M)FY2024: $80–$85 2025: $80–$85 Maintained
Net interest expense ($M)FY2024: $34–$36 2025: $42–$46 Higher (new notes outstanding)
Income tax expense ($M)FY2024: $17–$19 2025: $20–$22 Higher
Total capex ($M)FY2024: $420–$460 2025: $285–$320 Lower significantly
Distribution ($/unit)Qtrly$0.70 (maintained) $0.70 (maintained) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
AI/data centers driving baseload demandHighlighted rising grid demand and PJM auction outcomes; contracting momentum increasing Stronger tone: AI/data centers reshaping utility planning; expectation of extended coal plant operations and more supportive regulation Strengthening demand narrative
Supply chain/logisticsQ2: Ohio River flooding and Baltimore bridge disruption; shipping deferrals impacted volumes and inventories Fewer logistics issues mentioned; Appalachia challenges primarily geological/mining conditions Operational shift from logistics to geology
Tariffs/macroLimited prior detailMinimal expected impact from announced tariffs; mostly domestic exposure; caution given fast-moving DC environment Watchful, low direct impact
Mining conditions/AppalachiaLongwall moves and difficult geology elevated costs; proactive production alignment Two Feb longwall moves; new Tunnel Ridge district by May; confident on improvement; Mettiki harder to predict Near-term headwinds, improving from Q2/Q3
Regulatory/legalConcern over reliability and premature retirements; PJM capacity signals Expect more supportive policy; outreach to new administration; dialogue on MLP/tax, permitting, reliability Positive regulatory tailwind
Bitcoin/digital assetsFair value changes noted intra-year $45M fair value; upgraded miners improving efficiency; considering holding vs selling; January expenses not covered to retain upside Growing financial relevance

Management Commentary

  • “We anticipate ARLP's overall coal sales volumes in 2025 to be in the range of 32.25 million to 34.25 million tons with over 78% of these volumes committed and priced at the midpoint of our guidance range.”
  • “We are guiding sales pricing by region to a range of $50 to $53 per ton in the Illinois Basin… and $76 to $82 per ton in Appalachia… Our expected realized full year 2025 price is based on our contracted order book and expectations for additional contracting.”
  • “The rapid expansion of data centers and AI infrastructure… is fundamentally reshaping utility planning… the need to keep coal in the mix has never been clearer.”
  • “Tunnel Ridge… will be moving to the new district in May 2025… we should start seeing significant improvement… starting May going forward.”
  • “High sulfur export… is still at levels significantly below domestic alternatives… about 600,000 tons in 2025… if not there, we can place it domestically.”

Q&A Highlights

  • Tariffs exposure: Minimal expected direct impact; ARLP’s products are largely domestic; uncertainty remains given fast-moving policy context .
  • Contracting and 30M domestic tons goal: 26M tons already committed for 2025; active discussions could lift closer to normal historical levels in coming weeks; upside tied to weather/inventory normalization .
  • Export netbacks: High-sulfur export pricing remains unattractive vs domestic; ~600k tons contingent; potential domestic substitution if export netbacks don’t improve .
  • Appalachia operations: Two February longwall moves; Tunnel Ridge district change in May expected to materially improve costs; Mettiki geology remains less predictable .
  • Digital assets: Considering holding more Bitcoin given supportive policy signals; historically sold just enough to cover expenses; January expenses not covered to retain upside .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable due to request limits; as a result, no explicit beat/miss assessment can be provided. Values from S&P Global could not be retrieved at this time.

Key Takeaways for Investors

  • 2024 ended with substantial non-cash items and Appalachia headwinds; 2025 plan shifts to lower costs per ton and lower capex to protect margins despite lower realized pricing .
  • Contracting momentum is robust (26M tons committed; 78% at midpoint), with domestic solicitations rising as inventories normalize; watch for near-term additions in coming weeks .
  • Appalachia improvement hinges on execution of longwall moves and Tunnel Ridge district shift in May; monitor quarterly cadence for cost declines through 2025 .
  • Export pricing for high-sulfur coal remains a swing factor (~600k tons); domestic market remains a viable alternative, reducing risk to sales volumes .
  • O&G royalties are a bright spot: guided to record BOE volumes in 2025; segment expense ~14% of revenue enhances cash generation and diversification .
  • Capital discipline: capex down significantly; improved distribution coverage expected as costs fall and volumes stabilize; distribution maintained at $0.70 .
  • Macro/regulatory: AI/data-center-driven baseload demand and a more supportive regulatory backdrop are constructive for coal plant life extensions and ARLP’s multi-year sales and margin outlook .

Additional Q4 2024 Documents

  • Earnings press release and 8-K furnishing results and guidance .
  • Distribution announcement ($0.70 per unit) on Jan 28, 2025 .
  • Earnings call announcement on Jan 20, 2025 .