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    ARLP
    Earnings call· Jun 2026(Q2 FY26)

    ALLIANCE RESOURCE PARTNERS Q2 FY26 earnings call ARLP

    Jul 27, 2026 Source

    Executive summary

    Alliance Resource Partners Q2 FY26 — Record Oil & Gas Royalties and Strong Coal Performance

    Alliance Resource Partners delivered a strong second quarter, driven by record performance in its Oil & Gas Royalties segment following the AllDale acquisition and improved operating efficiency in coal. The company also secured significant new coal commitments, reinforcing its market position amidst growing electricity demand from data centers. Management is focused on disciplined capital allocation, prioritizing debt reduction and continued strategic investments.

    Highlights

    5

    • Total revenues increased to $551.6 million, up from the prior year.

    • Net income attributable to ARLP increased 33.9% to $79.6 million.

    • Adjusted EBITDA increased 14.7% to $185.7 million.

    • Oil & Gas Royalties segment delivered record quarterly revenue of $46.5 million and record segment adjusted EBITDA of $38 million.

    • Secured 21.2 million tons of new commitments, including 18.5 million tons domestic and 2.7 million tons export.

    Concerns

    2

    • Average coal sales price per ton was $54.87, down 5.3% year-over-year and 2.7% sequentially due to the expected roll-off of higher-priced legacy contracts.

    • Bitcoin holdings valued at $37.8 million, down 14.1% sequentially, resulting in a $6.3 million decrease in the fair value of digital assets.

    Guidance & targets

    9
    CategoryTargetConfidence
    Coal sales volume
    33.75 million to 35.25 million tons
    high materiality
    High
    Coal sales price
    $54 to $56 per ton
    high materiality
    High
    Total segment adjusted EBITDA expense
    $37 to $39 per ton
    high materiality
    High
    Oil & Gas Royalties volume (oil)
    1.95 million to 2.05 million barrels
    medium materiality
    High
    Oil & Gas Royalties volume (natural gas)
    10 million to 10.5 million Mcf
    medium materiality
    High
    Oil & Gas Royalties volume (natural gas liquids)
    1.1 million to 1.2 million barrels
    medium materiality
    High
    Net income attributable to noncontrolling interest
    $13 million to $15 million
    low materiality
    Medium
    Production volume
    1 million to 1.3 million more volume
    medium materiality
    Medium
    Equity method investments benefit
    around $3 million per quarter
    low materiality
    Medium

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Coal Operations
    Stronger coal operating results driven by higher sales volumes, improved operating cost performance, and significant investments in mines. Inventory decreased from prior periods.
    Total coal sales volumes: 8.6 million tonsTotal coal sales volumes YoY growth: 2.1%Total coal sales volumes QoQ growth: 8.9%Total coal production: 8.2 million tonsTotal coal production YoY growth: 1.5%Total coal production QoQ growth: 3%Average coal sales price per ton: $54.87Average coal sales price per ton YoY change: -5.3%Average coal sales price per ton QoQ change: -2.7%Segment adjusted EBITDA expense per ton: $38.68Segment adjusted EBITDA expense per ton YoY improvement: 6.3%Segment adjusted EBITDA expense per ton QoQ improvement: 6.6%Total coal inventory: 0.8 million tons
    		———$151.7 million
    Illinois Basin
    River View complex delivered strong productivity, partially offsetting lower Hamilton shipments due to a planned extended longwall move.
    Coal sales volumes: 6.4 million tonsCoal sales volumes YoY change: -4.5%Coal sales volumes QoQ change: 4.9%Coal sales price per ton: $51.87Segment adjusted EBITDA expense per ton: $35.99
    		————
    Appalachia
    Increased sales volumes primarily due to increased production at Tunnel Ridge. Sales price declined due to the expected roll-off of higher-priced legacy contracts. Significant cost improvement due to higher productivity and improved recoveries at Tunnel Ridge.
    Coal sales volumes: 2.2 million tonsCoal sales volumes YoY growth: 27.6%Coal sales volumes QoQ growth: 22.3%Coal sales price per ton: $63.57Segment adjusted EBITDA expense per ton: $46.22Segment adjusted EBITDA expense per ton YoY improvement: 29.7%Segment adjusted EBITDA expense per ton QoQ improvement: 25.7%
    		————
    Oil & Gas Royalties
    Delivered record quarterly revenue and segment adjusted EBITDA, driven by higher average realized sales price per BOE. The AllDale III & IV acquisition is expected to further boost performance starting Q3.
    BOE volumes: 936,000BOE volumes YoY growth: 6.4%BOE volumes QoQ change: -8.4%Average realized sales price per BOE YoY increase: 22.7%Average realized sales price per BOE QoQ increase: 22.1%
    		$46.5 million31.1%—$38 million
    Coal Royalty
    Driven by higher royalty tons sold, primarily from Tunnel Ridge and the River View complex.
    Segment adjusted EBITDA YoY growth: 9.7%Segment adjusted EBITDA QoQ growth: 5.7%
    		———$13 million

    Operational metrics

    22
    Net income attributable to ARLP
    $79.6 million33.9% increase YoY
    Q2 FY26

    Net income on a basic and diluted limited partner unit basis was $0.61.

    Adjusted EBITDA
    $185.7 million14.7% increase YoY, 19.8% increase QoQ
    Q2 FY26

    Driven by higher coal sales volumes, improved coal operating cost performance, record results from Oil & Gas Royalties, and higher income from equity method investments.

    Total debt and finance leases
    $590.2 million
    as of June 30, 2026

    Includes $56 million drawn on revolving credit facility to fund part of the AllDale acquisition.

    Cash
    $111.2 million
    as of June 30, 2026

    Cash balance at quarter end.

    Total liquidity
    $424 million
    as of June 30, 2026

    Includes cash on hand and available borrowings under revolving credit facilities.

    Net leverage ratio
    0.67x
    as of June 30, 2026

    Calculated after drawing on revolving credit facility for AllDale acquisition.

    Total leverage ratio
    0.82x
    as of June 30, 2026

    Calculated after drawing on revolving credit facility for AllDale acquisition.

    Bitcoin holdings
    646 bitcoins
    as of June 30, 2026

    Valuation based on Bitcoin price as of quarter end.

    Decrease in fair value of digital assets
    $6.3 million14.1% sequential decrease in Bitcoin value
    Q2 FY26

    Resulted from the sequential decline in Bitcoin price.

    Distributable cash flow
    $108.2 million
    Q2 FY26

    Reported for the quarter.

    Distribution coverage ratio
    1.39x39% increase QoQ
    Q2 FY26

    Increased significantly compared to the sequential quarter.

    New commitments (total)
    21.2 million tons
    Q2 FY26

    Secured by the marketing team during the quarter.

    New domestic sales commitments
    18.5 million tons
    Q2 FY26

    Part of the total new commitments.

    Export commitments
    2.7 million tons
    Q2 FY26

    Secured during a brief period of attractive export pricing.

    Committed and priced for 2027
    29.4 million tons
    as of Q2 FY26

    Reflects strong forward commitment for the next year.

    Oil & Gas Royalties ground game acquisitions
    $16 million
    Q2 FY26

    Represents the third consecutive quarter of ground game acquisitions at this level.

    PJM capacity auction clearing price
    $325 per megawatt day
    2028-2029

    Reinforces the value of dispatchable coal-fired generation needed to maintain system reliability.

    PJM preliminary hourly peak
    161.9 gigawatts
    July 1, 2026

    Required invocation of top weather maximum generation and load management procedures.

    DOE Defense Production Act Title III funding
    up to $500 million
    ongoing

    Aimed at supporting reliability and modernizing existing cogeneration.

    Expected distributable cash flow per unit increase from AllDale acquisition
    8% to 9%
    next year

    Expected to be immediately accretive to ARLP's free cash flow per unit.

    Term loan for AllDale acquisition
    $150 million
    July 1, 2026

    Used as part of the funding for the AllDale III & IV acquisition.

    Equity method investments benefit
    around $3 million
    per quarter

    General guidance for the run rate of income from equity method investments, driven by strong performance from Gavin power plant and NGP fund.

    Industry KPIs

    7
    MetricValueDetails
    D c efficiency rig activitySecond fastest
    Realized price differential$54.87USD/ton
    Basin level production volume6.4 million tonstons
    Cost of supply unit cash cost$38.68USD/ton
    FCF shareholder distributions$108.2 millionUSD
    Weather event volume earnings impactLower domestic coal demand
    Distributable cash flow per unit share$108.2 millionUSD

    Orderbook & backlog

    2
    New commitments (total)21.2 million tonsQ2 FY26

    Spread out over the next 5 years.

    Committed and priced for 2027 delivery29.4 million tonsQ2 FY26

    Reflects strong forward commitment.

    Deals & partnerships

    1
    AllDale Minerals III, LP and AllDale Minerals IV, LPAcquisition of certain general partner and limited partner interests in oil and gas minerals funds.$206.2 million

    ARLP acquired $206.2 million of third-party interest. Craft-related parties separately acquired $100 million. ARLP now owns 100% of the noneconomic general partner interest and approximately 61% economic interest across the two funds. Funded by cash on hand, revolving credit facility, and a new $150 million term loan. Cumulative investment in Oil & Gas Royalties now exceeds $1 billion.

    Risks & headwinds

    2
    Lower domestic coal demandH1 FY26

    Caused by mild weather and lower natural gas prices in H1 2026.

    Mitigation: Strong contracted sales book helped limit the impact.

    Bitcoin price volatilityQ2 FY26

    Bitcoin holdings valued at $37.8 million, down 14.1% sequentially, resulting in a $6.3 million decrease in fair value of digital assets and an impact of $0.05 per basic and diluted limited partner unit.

    Mitigation: Not explicitly stated.

    What to watch in Q3 FY26

    5

    Hamilton mine production and cost

    Q3 FY26
    CurrentStarted mid-May, showing consistent improvements.
    TargetDoubling Q2 production in Q3, driving lower costs for Illinois Basin.

    Why it matters

    Significant driver for overall coal production and cost efficiency in H2, impacting full-year guidance.

    I think with the Hamilton starting up mid-May, it's going to be producing at a higher run rate than what you've seen in the second quarter -- in the first quarter. So you're going to see probably a doubling of that production in the third quarter versus the second quarter. And that will drive costs lower for the Illinois Basin.

    Q&A highlights

    8

    How is ARLP thinking about capital allocation for the remainder of 2026, and is there appetite for incremental M&A after the AllDale acquisition?

    ARLP invested $16 million in ground game oil and gas acquisitions in Q2 and plans to continue at that pace. They are also looking at coal reserve issues, small investments, and opportunities like the Gavin power plant, driven by growing energy demand from data centers.

    “So we have included in our plan for the year, giving them the opportunity to continue that at that pace. We'll continue to look at other deals if they're attractive to us. in the coal space, we do have some reserve issues we're looking at. There could be some small investments that we're planning to make.”

    asked by Matthew Key · answered by Joseph Craft

    2 min read5 chapters

    Detailed Narrative

    01

    Q2 Performance Overview

    ARLP reported strong Q2 FY26 results with total revenues of $551.6 million, net income attributable to ARLP up 33.9% to $79.6 million, and adjusted EBITDA up 14.7% to $185.7 million. These gains were primarily fueled by higher coal sales volumes, improved coal operating costs, and record performance from the Oil & Gas Royalties segment, with net income also benefiting from lower prior-period impairment charges.

    02

    Coal Operations Efficiency and Outlook

    Coal sales volumes reached 8.6 million tons, up 8.9% sequentially, with total production at 8.2 million tons. Segment adjusted EBITDA expense per ton improved 6.3% year-over-year and 6.6% sequentially to $38.68, reflecting significant investments and productivity gains at mines like Tunnel Ridge and River View. With 2026 longwall moves completed, the company expects to meaningfully increase production and cash flow in H2, with costs improving by approximately 10% compared to H1.

    03

    Oil & Gas Royalties Growth and AllDale Acquisition

    The Oil & Gas Royalties segment achieved record quarterly revenue of $46.5 million and segment adjusted EBITDA of $38 million, driven by a 22.7% year-over-year increase in average realized sales price per BOE. The July 1 closing of the AllDale III & IV acquisition, a $206.2 million investment by ARLP, marks a significant milestone, expanding the segment's scale and development upside across multiple U.S. basins, including a meaningful Permian position and entry into the Haynesville.

    04

    Strategic Contracting and Market Position

    ARLP secured 21.2 million tons of new coal commitments, including 18.5 million domestic and 2.7 million export tons, positioning the company with 29.4 million tons committed and priced for 2027 delivery. Management highlighted the structural tightness in power markets, reinforced by PJM capacity auction results clearing at the $325 per megawatt day cap and increasing electricity demand from data centers, underscoring the value of reliable, dispatchable coal-fired generation.

    05

    Capital Allocation and Balance Sheet Management

    ARLP ended the quarter with $111.2 million cash and $424 million total liquidity. Post-AllDale acquisition, total and net leverage ratios were 0.82x and 0.67x debt to trailing 12 months adjusted EBITDA, respectively. The company plans to prioritize reducing leverage and maintaining financial flexibility while continuing disciplined minerals acquisition opportunities, including approximately $16 million in ground game acquisitions during Q2.

    AI-generated summary of the company’s earnings call. Not investment advice.