Alliance Resource Partners, L.P. (NASDAQ: ARLP) reported challenging fourth-quarter results for 2024, with total revenues declining 5.6% year-over-year to $590.1 million, according to a recent analysis by Stonegate Capital Partners. The company’s performance reflects broader industry pressures, including lower coal sales pricing and increased operating expenses.
Net income saw a significant decrease to $16.3 million compared to $115.4 million in the same quarter of 2023, partly due to non-cash impairment charges of $31.1 million related to the MC Mining operation. The company’s adjusted EBITDA reached $124.0 million, marking a 27.2% sequential decline.
In the coal operations segment, sales revenue dropped 3.3% year-over-year to $504.6 million, with coal sales volumes decreasing 2.3% to 8.4 million tons. The Illinois Basin segment showed some resilience with a 2.8% increase in sales volumes, while the Appalachia segment experienced a 17.1% decline due to reduced production at Tunnel Ridge.
Despite these challenges, Alliance Resource Partners maintains a strong liquidity position of $593.9 million, including $137.0 million in cash and $456.9 million in available credit. The company generated free cash flow of $75.2 million for the quarter, bringing the year-to-date total to $383.5 million.
The royalty business segment faced headwinds as well, with total royalty revenues decreasing 8.6% year-over-year to $48.5 million. While oil and gas royalty volumes showed a slight increase of 1.7%, pricing per BOE dropped 17.2% compared to the previous year.
Looking ahead, Alliance Resource Partners remains committed to its fiscal year 2025 guidance, anticipating improvements driven by operational efficiencies, a strengthening order book, and declining domestic inventories. The company maintained its quarterly cash distribution at $0.70 per unit, demonstrating confidence in its financial stability despite current market conditions.
Stonegate Capital Partners’ analysis suggests a valuation range of $27.89 to $30.97 per unit, based on an EV/EBITDA framework using fiscal year 2025 expected EBITDA and a multiple range of 5.0x to 5.5x. This valuation reflects both current challenges and future growth potential in the evolving energy market landscape.
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