ALLIANCE RESOURCE PARTNERS (NASDAQ:ARLP) Q3 2025 Earnings: EPS Beats, Revenue Misses Estimates

Earnings Performance

ALLIANCE RESOURCE PARTNERS (NASDAQ:ARLP) reported mixed financial results for the third quarter of 2025, with earnings per share surpassing analyst expectations while revenues fell slightly short. The market reaction has been moderately positive, with the stock showing strength in pre-market trading following the announcement.

The partnership reported Q3 2025 revenue of $571.4 million, coming in below the analyst consensus estimate of $578.4 million. This represents a 6.9% decrease compared to the same quarter last year, primarily driven by lower coal sales prices per ton, which declined 7.5%, and reduced transportation revenues. However, this was partially offset by increased coal sales volumes, which rose 3.9% to 8.7 million tons.

Profitability and Operational Efficiency

Where Alliance Resource Partners demonstrated significant strength was in its bottom-line performance. The company reported net income of $95.1 million, representing a 10.2% increase year-over-year. Earnings per share came in at $0.73, comfortably exceeding the analyst estimate of $0.65. This earnings beat was achieved despite the revenue shortfall, highlighting improved operational efficiency and cost management.

Key factors contributing to the earnings outperformance include:

• Reduced operating expenses across both Illinois Basin and Appalachia operations
• Higher investment income of $4.5 million
• Improved mining conditions, particularly at the Tunnel Ridge operation
• Lower Segment Adjusted EBITDA Expense per ton, which decreased 11.1% year-over-year

The company's Adjusted EBITDA increased 9.0% to $185.8 million compared to the same quarter last year, and showed an even stronger 14.8% sequential improvement from the second quarter of 2025.

Segment Performance Breakdown

The company's operations showed divergent trends across its business segments:

• Illinois Basin Coal Operations: Sales volumes increased 10.8% year-over-year to 6.6 million tons, though coal sales price per ton decreased 9.9% to $51.03
• Appalachia Coal Operations: Sales volumes decreased 13.3% to 2.1 million tons, but achieved a 3.1% increase in coal sales price per ton to $83.28
• Royalties Segment: Total royalty revenues increased 11.9% to $57.4 million, with coal royalties showing particularly strong growth of 54.5% in Segment Adjusted EBITDA

Strategic Initiatives and Market Position

During the quarter, Alliance Resource Partners made strategic moves to position itself for future growth, investing $22.1 million as part of a $25.0 million commitment in a limited partnership that indirectly acquired a coal-fired plant in the PJM service area. This investment aligns with the company's strategy to benefit from tightening power markets and growing demand for reliable baseload generation.

CEO Joseph W. Craft III emphasized the strong domestic thermal coal market fundamentals, noting that "utility coal consumption escalated across MISO and PJM service areas by 15% and 16% respectively, compared to the prior year." He attributed this surge not just to favorable weather and natural gas pricing dynamics, but also to "a realization of the dramatic load growth required by artificial intelligence."

Financial Position and Distribution

The partnership maintained a strong financial position, ending the quarter with total liquidity of $541.8 million and leverage ratios of 0.75 times total debt to trailing twelve months Adjusted EBITDA. Demonstrating confidence in its financial health, the Board of Directors declared a quarterly cash distribution of $0.60 per unit, maintaining an annualized distribution rate of $2.40 per unit.

Updated Guidance and Future Outlook

Alliance Resource Partners provided updated full-year 2025 guidance, tightening ranges for coal sales volumes and per ton expenses while adjusting Oil & Gas Royalties volume expectations. The company's contracting momentum remains strong, with 29.1 million tons committed and priced for 2026, representing a 9% increase from last quarter.

Looking ahead, management expressed optimism about market conditions, noting that "analysts we follow are projecting 4-6% annual growth in electricity demand in PJM and other markets we serve." The company believes it is well-positioned to increase production at Tunnel Ridge and Illinois Basin operations in 2026 to meet this anticipated demand.

For detailed earnings estimates and future projections, view the complete earnings analysis for ARLP.

Disclaimer: This article provides financial analysis for informational purposes only and does not constitute investment advice, recommendation, or endorsement of any particular security or investment strategy. Readers should conduct their own research and consult with a qualified financial advisor before making investment decisions.